Crypto: what you should know before investing

Introduction: why crypto matters for US investors

Crypto is becoming a mainstream asset class with meaningful implications for portfolio construction. From Bitcoin’s growing role as “digital gold” to the rise of blockchain-based financial infrastructure, it is reshaping how value is stored, transferred, and accessed. Understanding the fundamentals is essential for anyone looking to start investing in digital assets.

Over the past decade, what began as a grassroots experiment in digital money has evolved into a multi-trillion-dollar ecosystem that now intersects with some of the most powerful players in global finance.

Several milestones mark this shift toward legitimacy. The approval of spot Bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC) in early 2024 was a turning point, opening the door for retail and institutional investors to gain regulated exposure to digital assets. These ETFs now trade on traditional stock exchanges, making crypto more accessible and portfolio-compatible than ever before.

The transformation is also visible in the broader financial architecture. Major custodians, auditors, and payment networks now support digital assets. Global banks and asset managers are building crypto strategies. Central banks are piloting digital currencies. These developments are part of a broader trend: crypto is being absorbed into the mainstream financial system. 

While the landscape remains complex and uneven, the momentum toward regulatory clarity is accelerating, reducing barriers to entry for both institutions and individuals.

For investors, this means crypto is no longer something to ignore or dismiss. It demands understanding, evaluation, and—in many cases—consideration as part of a diversified portfolio.

Crypto is entering a new phase: not as a speculative outlier, but as a functional, investable asset class.

Cryptocurrency & blockchain: the fundamentals

A cryptocurrency is a digital form of money issued on a blockchain, as opposed to fiat currencies issued by central banks like the Federal Reserve.The blockchain technology underpinning the crypto ecosystem is a public ledger that records transactions. It’s decentralized, meaning multiple computers or ‘nodes’ store the data, and it relies on a consensus mechanism- like bitcoin’s ‘proof of work’- to process transactions and keep the network up to date. This decentralized design also means the network operates without a central authority, unlike the global financial system which relies on intermediaries such as central banks.

There are over 9,700 different cryptocurrencies and tokens as of June 2025, according to CoinMarketCap. The first and most famous one is bitcoin (BTC), but since its creation in 2010, many have followed to serve different purposes:

• Protocols native tokens used to pay transaction fees and secure networks, such as ETH for Ethereum and SOL for Solana.

• Stablecoins, which are cryptocurrencies pegged to fiat currencies like the US dollar- utility tokens, used to pay software usage and/or reward contributors (decentralised AI network, decentralised computing network, decentralised cloud provider, etc.)

• Memecoins, tokens inspired by internet trends, that have no intrinsic value besides entertainment and speculation. 

Although the terms are often used interchangeably, we distinguish cryptocurrencies and tokens this way: coins are issued on their own blockchain, like bitcoin or ether, and commonly used as a medium of exchange and the currency of their network; tokens, on the other hand, are associated to decentralized apps (dApps) or to back an asset, whether real-world or digital. Ethereum is the most popular protocol for launching tokens- of the 14.6 million created using its ERC-20 standard, 123,880 have been active in the 90 days to June 2025.

Bitcoin: the pioneer

Bitcoin is the largest cryptocurrency by market capitalization—over $2 trillion as of June 2025—and it accounts for nearly two-thirds of the overall crypto market. With a capped supply of 21 million units, Bitcoin has long been viewed as anti-inflationary. It is no coincidence that its launch in early 2009 came in the wake of the global financial crisis, as central banks were injecting unprecedented amounts of money into the economy.

As of July 2025, approximately 19.8 million BTC were in circulation, with the final Bitcoin projected to be issued in the year 2140. This built-in scarcity has contributed to Bitcoin’s reputation as digital gold, a label it has earned not just through limited supply, but also through characteristics that make it a compelling store of value:

• Durability: after more than 15 years of uninterrupted operation, Bitcoin has never been hacked. With 99.98% uptime, it is considered the most resilient blockchain network to date.

• Portability: as a digital asset, Bitcoin can move freely across borders. It can be transferred via the internet—and even through Bluetooth—enabling fast and low-cost transactions worldwide.

• Divisibility: one Bitcoin can be split into 100 million units, known as satoshis (or sats), a tribute to its mysterious creator, Satoshi Nakamoto.
  

Bitcoin’s security is underpinned by miners, who dedicate energy-intensive computing power—known as hashpower—to process and validate transactions. The greater the network’s hashpower, the more difficult it becomes for any single entity to alter the ledger, thereby protecting the system from threats like double spending or block reorganization.

Those qualities make Bitcoin the most sought-after digital asset. Its integration into U.S. investment products, such as ETFs and institutional funds, has been so successful that capital inflows now rival those of traditional gold products.

Exploring altcoins

Altcoins are all cryptocurrencies other than Bitcoin. The term simply means “alternative coins,” and includes thousands of digital assets that have emerged since Bitcoin’s launch in 2009. These coins often aim to improve upon or differentiate from Bitcoin in areas like speed, scalability, energy efficiency, or functionality.

While Bitcoin was designed as a decentralized, peer-to-peer digital currency, altcoins have driven much of the experimentation and innovation in the crypto ecosystem. They power platforms, enable programmable finance, support new governance models, and much more.

One of the most important altcoins is Ether (ETH), the native token of Ethereum, the second-largest blockchain network by market capitalization. Ethereum pioneered the use of smart contracts, self-executing programs that run when pre-defined conditions are met. These contracts allow developers to build decentralized applications (dapps) for everything from finance (DeFi) and gaming to art (NFTs) and social media.

Ethereum’s success has inspired the creation of other programmable blockchains. Some notable examples include:

• Solana (SOL) – Known for its high-speed and low-cost transactions, often used for NFTs and DeFi.

• Cardano (ADA) – Focuses on peer-reviewed research and gradual, secure upgrades.

• Tron (TRX) – Originally built to support digital content creators and now active in stablecoins and payments.
  

How to gain exposure

For a long time, retail investors could only access crypto through exchanges and trading apps, tools that offered convenience but came with risks like platform outages, hacks, and complex custody. Today, it’s easier and safer to gain exposure through regulated investment products like Bitcoin and Ethereum ETFs, which trade on mainstream stock exchanges and are overseen by financial authorities.

At the same time, a new wave of crypto treasury companies has emerged—public firms holding large amounts of digital assets. While these can offer indirect exposure, they don’t provide direct ownership of crypto and come with third-party risks tied to corporate governance, leverage, and operational decisions. Understanding the difference between holding crypto yourself and gaining exposure through a proxy is key for managing risk.

Key takeaways

With the approval of spot Bitcoin ETFs and the entry of major financial players like BlackRock and Fidelity, crypto is becoming integrated into traditional investment portfolios. Understanding the basics is now essential for informed investors. Bitcoin remains the anchor of this ecosystem—scarce, secure, and increasingly treated as a store of value. But the broader crypto landscape, driven by altcoins and smart contract platforms like Ethereum, is where much of the technological innovation is taking place. With regulatory milestones like the approval of spot Bitcoin ETFs and the accelerating development of blockchain infrastructure, digital assets are becoming more accessible, more integrated, and more strategically relevant.

As with any emerging sector, volatility and risk remain. But so does potential. The question now is not if it belongs in a portfolio, but how. Read our next article to discover why Bitcoin makes a strong investment case.