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Crypto Explained: fun facts and quiz
The essentials in 7 ideas, with fun facts, an illustrated story and a quiz to see how much you know.
The essentials
What Crypto Is
Cryptocurrencies are digital money that isn’t issued by a central bank. Bitcoin, launched in 2009, was the first.
Key fact
Bitcoin’s creator used the name Satoshi Nakamoto; their identity is unknown.
The Blockchain
A blockchain is a shared record of transactions, copied across many computers. New entries are added in blocks, linked so that past records are very hard to change.
Key fact
No single company controls the Bitcoin blockchain.
Mining
Bitcoin “miners” use powerful computers to compete to add the next block, earning new coins. It uses a lot of electricity.
Key fact
Bitcoin mining uses about as much electricity as some whole countries.
Limited Supply
Only 21 million bitcoins will ever exist. Some see that scarcity as a strength; critics point out that prices are still extremely volatile.
Key fact
Over 19 million bitcoins have already been mined.
Ups & Downs
Crypto prices swing wildly: Bitcoin has lost over half its value several times, and many coins have collapsed completely. Regulators warn you could lose all your money.
Key fact
Never invest more than you can afford to lose.
Scams & Safety
Crypto is a favourite of scammers: fake investment schemes, impersonated celebrities and phishing for wallet keys. Transactions usually can’t be reversed.
Key fact
Anyone asking for your recovery phrase is a scammer.
Beyond Bitcoin
Other blockchains, like Ethereum, run “smart contracts”: programs that carry out agreements automatically. Stablecoins try to keep a steady value, often tied to the US dollar.
Key fact
Ethereum launched in 2015.
Fun facts
The million or so bitcoins thought to belong to Satoshi Nakamoto have never been spent.
Bitcoin’s very first block contains a newspaper headline from 2009 about bank bailouts.
A new block is added to the Bitcoin blockchain about every 10 minutes, on average.
Each bitcoin can be split into 100 million pieces, called satoshis, so people can own a tiny fraction of one.
In 2022, a “stablecoin” called TerraUSD collapsed within days, wiping out tens of billions of dollars.
A man in Wales accidentally threw away a hard drive holding thousands of bitcoins. It’s still somewhere in a landfill.
Ethereum was proposed in 2013 by Vitalik Buterin, then just 19.
Story: The 10,000-Bitcoin Pizzas
The 10,000-Bitcoin Pizzas
May 2010. Programmer Laszlo Hanyecz posts on a Bitcoin forum: he’ll pay 10,000 bitcoins to anyone who sends him two large pizzas.
A few days later, a 19-year-old in California orders two pizzas to Laszlo’s home in Florida, and takes the coins, then worth about $40.
It was the first known purchase of real goods with Bitcoin. At later prices, those pizzas cost hundreds of millions of dollars.
True or false?
Tap your answer to see if you got it, and why.
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Question 1 of 10
Bitcoin’s creator is known only by a pseudonym.
Show the answer
True. Satoshi Nakamoto; their identity is unknown.
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Question 2 of 10
A blockchain is a shared record kept on many computers.
Show the answer
True. Copies are spread worldwide.
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Question 3 of 10
Bitcoin mining uses a lot of electricity.
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True. Huge amounts, around the clock.
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Question 4 of 10
Over 19 million bitcoins have already been mined.
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True. Most of the 21 million.
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Question 5 of 10
Crypto prices can swing wildly.
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True. Up and down, sometimes in days.
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Question 6 of 10
Crypto transactions usually can’t be reversed.
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True. Once sent, it’s gone.
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Question 7 of 10
Stablecoins aim to keep a steady value.
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True. Often pegged to the US dollar.
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Question 8 of 10
Bitcoin is issued by a central bank.
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False. No central bank controls it.
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Question 9 of 10
Past blockchain records are easy to change.
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False. Linked blocks make that very hard.
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Question 10 of 10
Bitcoin miners dig coins out of the ground.
Show the answer
False. They use computers, not shovels.
Keep going in the app
KnowSoda learns what you know and brings back what you’re about to forget. Crypto Explained has 6 more ideas at the Advanced and Expert levels.
Sources
- Satoshi Nakamoto (2008), “Bitcoin: A Peer-to-Peer Electronic Cash System”
- Cambridge Centre for Alternative Finance — Bitcoin electricity consumption index
- UK Financial Conduct Authority — Cryptoassets: know the risks
- U.S. SEC — Investor alerts on crypto scams
- Ethereum.org — History of Ethereum
- Ethereum Foundation — The Merge
- Encyclopaedia Britannica — FTX collapse; bitcoin halving
- Chainalysis — Lost bitcoin estimates
