Cryptocurrency basics for a non-tech audience

In our previous blog post, we started to introduce the idea of innovation in payments, and set the scene for describing just what cryptocurrency is and isn’t… and why you might want to look into crypto for your own use.

A beginning primer on cryptocurrency — Just the facts

To dive right in with a bit of background, the number of cryptocurrency users is growing rapidly, jumping from around 18 million to 35 million during 2018. Bitcoin adoption itself went up by over 700 percent during the past six years. But despite these impressive numbers, cryptocurrency adoption, and moreover application/use, has not been staggering. Naturally an entire ecosystem for accepting, using, redeeming, trading and assigning relatively stable value to crypto assets, has to be in place to inspire confidence in retailers and consumers alike.

Until now, the potential crypto benefits, such as leveraging cross-border payment capabilities, possibly escaping outsized fees levied by middlemen, or quicker payment settlement times for retailers versus credit cards, have not outweighed the risks, fluctuations and uncertainties of cryptocurrency. Thus cryptocurrency has remained a growing but still “fringe” financial instrument, relegated to little-understood footnotes in mainstream media. Likewise the majority of active cryptocurrency traders have been highly technical speculators who prefer cryptocurrency as a volatile investment with unstable values — the risks are high, but so are the potential payoffs.

This is beginning to change, and one way to help facilitate this change is to make cryptocurrency a lot clearer for a lot more people than it is today.

What are cryptocurrencies?

At the most basic level: what is a cryptocurrency?

*Cryptocurrency: A digital currency that lives in an open, decentralized system.*

No definition is perfect — or comprehensive. This definition basically tells you what it is, but it’s still confusing. How is it secure, for example, if it’s living in an open, decentralized system? That’s where the blockchain, which we began to describe in our previous post, comes in.

*Cryptocurrency is a digital currency that relies on the open, decentralized nature of blockchain technology to create a payment system in which the system itself can be trusted although the individual parts that make up the system must be part of and accepted by the blockchain to be trusted.*

This still won’t be clear to everyone. And the technicalities don’t need to be. After all, most people don’t know exactly how electronic funds transfers and SWIFT-based wires work. They just know that by providing a series of account and routing numbers to a paying party, they will eventually get paid. And cryptocurrency, for the end user, is not a whole lot different from that. In fact, once cryptocurrency becomes a regular way to pay, it may even be easier from the user’s point of view.

What the curious possible user should take away here: cryptocurrency is simply a digital form of money or store of value. As certain cryptocurrencies mature, the more they fulfill some of the key requirements of what people and companies need money for:

  • Being a store of value
  • Offering lending possibilities

What makes crypto different, technically, apart from its purely digital existence, is its decentralized nature, meaning that, unlike fiat currencies and securities, no single party has control over it. And experientially, crypto poses some disruptive challenges to the status quo to traditional banking and payments paradigms, which can explain some of the resistance to cryptocurrency’s rise. Not that all questioning is negative: after all, one is right to question why something is needed if we have something that works perfectly well today. Given that we already have the money we’re used to using, how do we justify cryptocurrency? Here we get back to the points we’ve already begun making:

  • Avoiding unnecessary fees that come from middlemen (Visa, Mastercard)
  • More rapid payment settlement times for businesses
  • Possible greater stability in volatile currencies and economies, e.g. countries living under hyperinflationary conditions, such as Venezuela, Argentina or Zimbabwe, in recent years
  • Security of blockchain-based transactions

Which are the most common cryptocurrencies? What do they do, what are the benefits of each? What can I do with them?

Most people have heard of Bitcoin by now, and you wouldn’t be alone if you thought Bitcoin was the only cryptocurrency, or in fact, that “Bitcoin” is synonymous with “cryptocurrency”. The same applies, incidentally, for mistaking “cryptocurrency” for “blockchain”. They are all related, but they are not all the same thing.

While Bitcoin is by far the biggest, best-known and, for now, the most valuable of the world’s many cryptocurrencies, it is far from being alone:

“The total market capitalization of digital coins and tokens at the end of January 2018 was $520 billion (down from US$830 billion in early January 2018). According to Coinmarketcap, there were 1,474 cryptocurrencies at the end January compared with 682 at the same time in 2017, and a total of 9.1 trillion cryptocurrency coins outstanding. The market capitalisation at the end of December 2017 represents more than 15% of currency held by the public in the US, Japan, and the euro area combined, compared with less than 1% in December 2016.” (“Cryptocurrencies challenge status quo”, March 2018.)

Yes… you read that right: there were actually more than 1,474 different cryptocurrencies at the end of January 2018 — and that was more than a year ago. In fact the exact number of cryptocurrencies is impossible to know, but these are just the ones Coinmarketcap listed. Regardless, most people can probably only name a small handful of these, and ultimately only a few are major players in the various cryptocurrency markets (which is another story).

What are the most common cryptocurrencies?

Among the most common cryptocurrencies in use today are:




Bitcoin and Litecoin are meant to be a secure, censorship-resistant, value and settlement layer. They are both digital and decentralized cash.

Ethereum on the other hand is a decentralized world computer where you can run something called smart contracts as well as run decentralized applications. Basically you can make contracts that take action on their own when certain programmed conditions are met. (This is a smart contract)

Decentralized applications are run on the ethereum network. Imagine a decentralized version of Facebook or Twitter where there is no central ownership and all data are implemented in a blockchain. It requires no middleman or trusted entity to function. Just code and means to run that code.

There are other cryptocurrencies, obviously, but we will delve into greater detail about those another time, as and when needed.

Who created these cryptocurrencies?

While it is probably not important to your understanding of cryptocurrency to know where it came from or who created them, it does provide some background.

Bitcoin was created by Satoshi Nakamoto and released into the wild in early 2008. At least “Satoshi Nakamoto” is the handle that was used to communicate and push code. The actual identity of the possibly pseudonymous Satoshi Nakamoto is unknown. There have been theories but nothing has been proven so far. Satoshi vanished in late 2010 but because Bitcoin is a decentralized, consensus-based system, its founder or indeed any individuals involved in its creation or “operation” do not matter. Bitcoin was designed precisely for this: it does not care and just carries on existing.

Litecoin was invented by the computer scientist Charlie Lee in late 2011, who is still active in the crypto community.

Ethereum was created by a programmer named Vitalik Buterin and was proposed in 2013, development was funded by a online crowd-sale in 2014 and it went live in July 2015.

The crypto future

While the future of cryptocurrency is evolving, it is clear that it is moving in a mainstream direction. More people are are investing in, and looking for ways to use, cryptocurrency, and this is part of our own mission at NBX and moreover at Norwegian Air Shuttle.

Continue to follow this blog to learn more about this evolution and how we are taking part. And, of course, don’t forget to sign up to our standby list to receive important news directly from NBX, including our launch date.