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Bitcoin ATMs provide a convenient way to buy — and at some locations, sell — cryptocurrency using cash or, in some cases, a debit card. Unlike traditional bank ATMs, these machines connect to your digital wallet rather than your checking or savings account, allowing cryptocurrency transactions to be completed through the blockchain.

Bitcoin ATMs offer convenience, but they also come with certain risks, fees, and limitations. Understanding how they work, what they’ll cost, and how to recognize common scams can help you decide whether a Bitcoin ATM is the right choice for your next transaction.

How to Use a Bitcoin ATM Safely

Using a Bitcoin ATM is generally straightforward, but it’s important to understand the process before you consider using one. While individual machines may vary slightly, they generally follow the same basic steps. Before getting started, make sure you have a compatible digital wallet and be prepared to complete any required identity verification.

1. Find a Licensed Machine

Bitcoin ATMs are commonly located in convenience stores, grocery stores, shopping centers, gas stations, and other public locations. You can find a nearby machine using an online locator like CoinATMRadar or by searching a participating operator’s website.

Before using a machine, confirm that it’s operated by a legitimate company. In the United States, Bitcoin ATM operators are generally required to register as money services businesses with the Financial Crimes Enforcement Network (FinCEN) and comply with federal anti-money laundering (AML) and Know Your Customer (KYC) requirements. Avoid using machines that appear damaged, have been tampered with, or display suspicious instructions.

2. Complete Identity Verification

Bitcoin ATMs typically require some form of identity verification before you can complete a transaction. The exact requirements depend on the operator and the size of your transaction, but you may be asked to:

•   Enter your mobile phone number to receive a one-time verification code

•   Scan a government-issued photo ID

•   Take a live selfie or photo for identity verification

Once your information has been verified, you can continue with your transaction.

3. Scan Your Wallet Address

Next, connect the Bitcoin ATM to your crypto wallet by scanning your wallet’s QR code. This tells the machine where to send the cryptocurrency you purchase. Before confirming the transaction, double-check that you’ve entered the correct wallet address, as blockchain transactions are final and irreversible once submitted.

4. Complete Your Transaction

To buy Bitcoin, insert cash — or, if the machine accepts it, use an available payment method — and confirm the purchase amount. If you’re selling Bitcoin at a two-way ATM, you’ll typically scan a QR code displayed on the machine, send the requested amount of cryptocurrency from your wallet, and wait for the blockchain transaction to be confirmed before the ATM dispenses cash.

When the transaction is complete, keep your receipt for your records and verify that the cryptocurrency has arrived in your wallet or that you received the correct cash payout. Depending on network traffic, blockchain confirmation times can vary, so your transaction may not appear immediately.

What Is a Bitcoin ATM?

Bitcoin ATMs are self-service kiosks that allow users to buy — and at some locations, sell — cryptocurrency. Instead of accessing a bank account, they connect directly to a digital wallet, making it possible to exchange cash for cryptocurrency or convert cryptocurrency into cash at participating machines.

How Does a Crypto ATM Differ From a Traditional Bank ATM?

Although they look similar, crypto ATMs and traditional bank ATMs serve different purposes. A bank ATM lets you access money that’s already in your checking or savings account, allowing you to withdraw cash, make deposits, or check your balance. A crypto ATM, on the other hand, is designed to buy or sell cryptocurrency. Rather than connecting to a bank account, it interacts with your digital wallet and processes transactions on the blockchain.

Crypto ATMs also differ in how they’re regulated and used. Most require identity verification before you can complete a transaction, and they typically charge higher fees than traditional bank ATMs. Depending on the machine, you may be able to purchase cryptocurrency only or both buy and sell digital assets.

Why Are They Called “Vending Machines” for Bitcoin?

Bitcoin ATMs are sometimes described as “crypto vending machines” because they exchange cash for digital assets. However, unlike a traditional vending machine, the cryptocurrency is delivered electronically to your wallet rather than dispensed physically.

How Does a Bitcoin ATM Work?

When you make a transaction, the Bitcoin ATM verifies your identity, processes your payment, and transfers cryptocurrency to or from your digital wallet using the blockchain. Depending on the operator, the machine may source cryptocurrency through an exchange or another trading platform.

Bitcoin ATMs are either one-way machines that only support purchases or bidirectional machines that allow both buying and selling. Supported cryptocurrencies, payment methods, transaction limits, and identity verification requirements vary by operator and location.

Role of Your Digital Wallet

A cryptocurrency wallet is essential for using a Bitcoin ATM. This is a type of digital wallet that stores the private keys needed to access and move your cryptocurrency, and its public address (represented as a QR code) is what tells the ATM where to send your purchase.

Before visiting a Bitcoin ATM, you’ll need a compatible wallet that can generate a QR code for your receiving address. Scanning this code reduces the risk of entering a wallet address manually and helps ensure your cryptocurrency is sent to the correct destination.

Your wallet’s private keys and recovery phrase (the “master key” for your entire wallet) should never be shared with anyone. Anyone who gains access to those credentials can control your cryptocurrency, and transactions generally can’t be reversed.

Recommended: Crypto Wallet vs Crypto Exchange

Important Considerations Before You Use a Crypto ATM

Bitcoin ATMs are convenient, but that convenience comes with some tradeoffs. Before you use one, it’s worth understanding the fees you’ll pay, the limits you may run into, and common scams targeting crypto ATM users.

Transaction Fees and Spreads

Bitcoin ATMs typically charge higher fees than online cryptocurrency exchanges to cover operating expenses, compliance requirements, and cash handling. In addition to a stated transaction fee, many operators build a markup — often called a spread — into the exchange rate they offer. This means the price you pay for Bitcoin (or receive when selling it) may differ from the current market price.

Before confirming your transaction, review both the listed fees and the exchange rate. Comparing the total cost with other ways to buy or sell cryptocurrency can help you determine whether a Bitcoin ATM is the most economical choice.

Daily Limits and Privacy

Bitcoin ATMs often limit how much cryptocurrency you can buy or sell in a single transaction or over a day. The exact limits vary by operator, location, and applicable regulations. Larger transactions may require additional identity verification, such as providing a government-issued ID and occupation information.

Although Bitcoin transactions are recorded on a public blockchain, using a Bitcoin ATM is generally not anonymous. Operators typically collect personal information to comply with federal AML and KYC requirements. Before using a machine, review the operator’s privacy policy so you understand what information is collected and how it may be used.

Common Bitcoin ATM Scams to Avoid

Crypto scammers commonly direct victims to Bitcoin ATMs because they provide a quick way to convert cash into cryptocurrency and send it to the fraudster’s wallet. A common scam tactic is to impersonate a government agency, utility company, bank, law enforcement office, or technical support representative and claim that you owe money or need to make an urgent payment. They then pressure you to deposit cash into a Bitcoin ATM and send cryptocurrency to a wallet they control.

Other scams — including investment fraud, romance scams, and so-called “pig butchering” schemes — may promise unusually high returns or attempt to build trust over time before asking you to send cryptocurrency.

Protect yourself by sending cryptocurrency only to people and businesses you know and trust. If someone contacts you unexpectedly demanding payment, verify the request by contacting the organization directly using official contact information rather than responding to the message or phone call. Be especially cautious of anyone who pressures you to act immediately or insists that Bitcoin is the only acceptable form of payment.

Is Buying Bitcoin at an ATM the Right Move for You?

A Bitcoin ATM can be a fast, straightforward way to get started with crypto, especially if you want to make a small, one-time purchase with cash and don’t already have accounts set up elsewhere. However, that convenience often comes at a higher cost.

Before completing a transaction, compare the ATM’s fees, transaction limits, and available cryptocurrencies with other purchasing methods. If you’re planning to make recurring crypto buys or larger purchases, an online cryptocurrency exchange or other digital asset service provider may provide lower costs and additional features.

ATM Purchases vs. Buying on a Centralized Exchange

Bitcoin ATMs have their benefits, but there are some situations where you may be better off using a centralized crypto exchange to buy or sell cryptocurrencies. Here’s how the two compare:

The Takeaway

Bitcoin ATMs offer a convenient way to buy — and sometimes sell — cryptocurrency. Before using one, however, it’s important to compare the machine’s fees, exchange rate, transaction limits, and identity verification requirements with other available options. Whether you’re making your first cryptocurrency purchase or converting crypto into cash, using a reputable operator and following basic security precautions can help ensure a smoother, more secure transaction.

SoFi Crypto is back. SoFi members can now buy, sell, and hold cryptocurrencies on a platform with the safeguards of a bank. Access 25+ cryptocurrencies, such as Bitcoin, Ethereum, and Solana, with the first national chartered bank to offer crypto trading. Now you can manage your banking, investing, borrowing, and crypto all in one place, giving you more control over your money.

FAQ

How do I use a Bitcoin ATM without a wallet?

In most cases, you can’t. Before buying cryptocurrency at a Bitcoin ATM, you’ll typically need a compatible digital wallet to receive your coins. The ATM scans your wallet’s QR code to know where to send the cryptocurrency. Some operators may offer paper wallets or help you create a wallet during the transaction, but this isn’t common. Setting up a secure digital wallet before visiting a Bitcoin ATM is generally the easiest option.

Are Bitcoin ATMs safe for buying crypto?

Bitcoin ATMs can be a safe way to buy cryptocurrency if you use a machine operated by a legitimate provider. Choose an ATM from a reputable operator, verify any fees before confirming the transaction, and double-check your wallet address before sending funds. Be cautious if anyone tells you to use a Bitcoin ATM to make a payment, especially if they claim to represent a government agency, bank, or utility company. Cryptocurrency transactions generally can’t be reversed.

Why are the fees higher at a Bitcoin vending machine?

Bitcoin ATMs typically charge higher fees because operators must cover expenses such as machine maintenance, cash handling, regulatory compliance, and security. Many machines also include a spread, which is the difference between the market price of Bitcoin and the exchange rate offered by the ATM. Before completing a transaction, review both the stated fee and the exchange rate so you understand the total cost.

Can I use a Bitcoin ATM to withdraw cash?

Some Bitcoin ATMs allow you to withdraw cash by selling cryptocurrency, but not all machines offer this feature. Two-way, or bidirectional, Bitcoin ATMs let you send cryptocurrency from your digital wallet to the machine and receive cash after the transaction is confirmed on the blockchain. One-way Bitcoin ATMs only allow you to purchase cryptocurrency. Check the machine’s capabilities before visiting if you plan to sell crypto for cash.

Do all Bitcoin ATMs require an ID?

Yes. In the United States, you’ll need to verify your identity before using a Bitcoin ATM. As money services businesses, Bitcoin ATM operators must comply with federal Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements. The verification process varies by operator and transaction amount, but it may include providing your mobile phone number, scanning a government-issued photo ID, taking a selfie, or completing other identity checks before your transaction can be approved.

Photo credit: iStock/mediamasmedia

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In the crypto world, custody refers to how private keys — the digital credentials that prove ownership of cryptocurrency and allow access to it – are stored and managed. Crypto custody matters because if you lose your private keys or someone steals them, you may permanently lose access to your digital assets.

There are several approaches to cryptocurrency custody, but they generally fall into two categories: self-custody, where you control your own private keys, and third-party custody, where another company manages them on your behalf. Each option offers its own benefits and tradeoffs.

Understanding Cryptocurrency Custody

Crypto custody refers to who manages and has access to the private keys associated with your digital assets.

Depending on the custody model, those keys are either controlled directly by you (self-custody) or by a third-party provider such as a crypto exchange, bank, or financial services provider. With custodial services, you remain the owner of your cryptocurrency, while the provider is responsible for safeguarding the private keys and processing authorized transactions.

The Role of Private Keys

Cryptocurrency networks rely on two types of cryptographic keys: a public key and a private key.

A public key works much like an email address or bank account number. You can safely share it with others so they can send cryptocurrency to you.

A private key functions like a password or PIN. It must remain a secret because it is used to access your holdings, authorize transactions, and transfer cryptocurrency. Although cryocurrencies are not stored inside a crypto wallet, the wallet securely stores the private keys needed to access them. Crypto custody is simply the method used to protect those keys.

Recommended: What is Blockchain?

The Core Crypto Custody Models

When deciding how to secure your digital assets, there are three primary custody models to understand: self-custody, third-party custody, and exchange custody.

Self-Custody Solutions

Self-custody means you control your own private keys and are fully responsible for securing them. There are two common types of self-custody wallets:

• Software wallets (hot wallets): These are mobile apps, desktop software, or browser extensions that are connected to the internet.

• Hardware wallets (cold wallets): These are physical devices that store private offline for added protection.

Self-custody provides direct control over your digital assets, eliminates reliance on third parties, and offers greater privacy. However, it also means you are solely responsible for protecting your recovery phrase (the “master key” to your crypto wallet) and private keys. If they are lost or compromised, there is generally no way to recover access.

Recommended: How to Check a Crypto Wallet Address

Third-Party Custodians

A third-party custodian is a company or financial institution that stores and protects private keys on your behalf. Instead of managing the security of your wallet yourself, you rely on the custodian to safeguard your assets, process authorized transactions, and maintain security systems designed to protect against theft and unauthorized access.

Professional custodians may appeal to individuals and organizations that prefer convenience and want to delegate the responsibility of managing their own keys.

Exchange Custody

Exchange custody is a form of third-party custody in which a cryptocurrency exchange manages your private keys. When you purchase crypto through an exchange, the assets are typically held within the exchange’s custody system unless you choose to transfer them to a personal wallet.

Many exchanges combine customer assets in secure wallets, keeping only a small portion of internet-connected hot wallets to process withdrawals while storing the majority in offline cold storage.

How Custodians Secure Digital Assets

Professional crypto custodians typically rely on multiple layers of security rather than a single password or device. They often combine offline storage, advanced cryptography, strict access controls, and continuous monitoring to reduce the risk of theft or unauthorized access.

Cold Storage vs. Hot Wallets

Custodians typically divide assets between hot wallets and cold storage based on operational needs.

The majority of digital assets are typically held in cold storage, where private keys remain offline, reducing exposure to any online threats. These devices are often stored in highly secure facilities with extensive physical safeguards.

A smaller portion may be kept in hot wallets, which remain connected to the internet to support customer withdrawals and other routine transactions. Because hot wallets face greater online risk, custodians generally apply spending limits, monitoring systems, and other security controls to minimize potential losses.

Multi-Signature Technology

Traditional wallets secured by a single private key creates a potential vulnerability. Mutli-signature (multi-sig) technology improves security by requiring multiple independent approvals before a transaction can be completed.

For example, a custodian might require three out of five authorized keys to approve a transfer. Even if one or two keys are compromised, an attacker still cannot move without obtaining the required number of approvals.

Who Needs a Crypto Custodian?

The right custody solution depends on your individual experience, preferences, and security needs. For instance, if you buy cryptocurrency online through a financial institution or bank, you may find that custodial services are automatically provided as part of your account. This is also common practice when you purchase assets through a cryptocurrency exchange, where the platform manages the underlying security on your behalf.

These third-party custodial arrangements can be a good fit if you prioritize convenience, account recovery options, and professional security oversight over maintaining direct control of their own private keys. Conversely, self-custody can be an effective approach for crypto users who want complete, independent control over their private keys and are comfortable assuming the responsibility of managing their own security.

The Takeaway

Crypto custody determines who controls and protects the private keys that provide access to digital assets. Whether you choose self-custody or third-party custody, each approach involves different tradeoffs between control, convenience, and security. Understanding how these custody models work can help you choose the option that best fits your needs and comfort level with managing digital assets.

SoFi Crypto is back. SoFi members can now buy, sell, and hold cryptocurrencies on a platform with the safeguards of a bank. Access 25+ cryptocurrencies, such as Bitcoin, Ethereum, and Solana, with the first national chartered bank to offer crypto trading. Now you can manage your banking, investing, borrowing, and crypto all in one place, giving you more control over your money.

FAQ

What happens if I lose my private crypto keys?

If you lose your private keys or recovery phrase, you may lose access to your cryptocurrency permanently. Unlike a bank account, there is usually no company that can reset your password or restore access. This is why people who use self-custody must carefully protect their private keys and recovery phrases. If you use a crypto custodian, the company manages the private keys, so losing your login information generally doesn’t mean losing access to your assets.

Are crypto custodians regulated by the government?

Crypto custodians are generally regulated, but the rules depend on the company, where it operates, and the services it provides. Cryptocurrency regulations vary by location and continue to evolve. Before choosing a custodian, consider factors such as its security practices, licensing or regulatory status, and how it protects customer assets.

How much does a third-party crypto custody service cost?

The cost of a third-party crypto custody service depends on the provider and the services offered. Some companies charge account fees, transaction fees, or fees based on the amount of cryptocurrency stored. Some exchanges include custody as part of their services. Before choosing a provider, review its fees and understand what services are included.

Can I switch between self-custody and an exchange?

Yes. You can usually move cryptocurrency between a personal wallet and an exchange that supports transfers. For example, you can typically move assets from an exchange to a self-custody wallet or transfer them back to an exchange. Be careful when making transfers because sending cryptocurrency to the wrong address or using the wrong network may result in lost funds.

Can I lose my crypto with a custodian?

Yes. Using a custodian does not remove all risks. While custodians use security measures to protect digital assets, problems such as security breaches, company failures, or operational issues could still affect access to your cryptocurrency. A custodian can make managing private keys easier, but it does not guarantee that your assets are risk-free.

Photo credit: iStock/Eva-Katalin

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When Bitcoin launched in 2009, it was the only digital currency of its kind. By 2011, though, new types of cryptocurrency began to emerge as competitors adopted the blockchain technology Bitcoin was built on to launch their own platforms and currencies. Suddenly, the race to create more crypto was on.

Read on to learn more about the seven main types of cryptocurrency, from proof-of-work to proof-of-stake cryptocurrencies, to utility tokens, stablecoins, and more.

Understanding the Cryptocurrency Landscape: More Than Just Bitcoin

Bitcoin (BTC) may be the most recognized cryptocurrency, but it is one of thousands. It’s difficult to pin down an exact number for how many cryptocurrencies exist, since new coins continue to be developed while others become obsolete.

By some counts, close to 55 million unique cryptocurrencies have been created over time, with more on the way. While cryptocurrencies have been largely unregulated for much of their history, that’s been changing in recent years. A regulatory framework has begun to take shape as the Securities and Exchange Commission (SEC), U.S. Congress, and other agencies in the U.S. and abroad have passed crypto-related regulations and laws.

What Is Cryptocurrency and Why Do Different Types Exist?

Cryptocurrency is a type of digital asset that’s created, validated, and exchanged through the blockchain, without the need for any type of central clearing intermediary. Transactions are publicly viewable on the blockchain, but the identities of those exchanging cryptocurrencies are not transparent (though not always untraceable), adding to its appeal for some.

Why are there so many different types of cryptocurrency? Innovation, a push towards decentralized finance, and increased market interest all play a part.

Developers have created different types of cryptocurrencies largely to support and expand the capabilities of blockchain networks. Cryptocurrencies such as Bitcoin and Litecoin were developed to support peer-to-peer payments, for example, while others, such as Ethereum and Solana, were designed to support blockchain-based decentralized apps (dApps).

Utility tokens were developed to provide access to services or functionalities on a blockchain network — governance tokens, for instance, allow users to vote on decisions being made by a certain network.

Blockchain technology is also being actively explored in areas outside of finance, such as healthcare, supply chain management, real estate, and art.

The Fundamental Difference: Coins vs Tokens

Although some people use the terms crypto, coins, and tokens interchangeably, they’re not the same. To gain a basic understanding of cryptocurrency, it’s important to understand how these terms differ from one another.

Cryptocurrency may broadly refer to coins or tokens, but the two have different meanings:

•   Coins: Crypto coins are native to their own blockchain network, and provide a means of exchange. They’re strings of computer code that can represent an asset, concept, or project — whether tangible, virtual, or digital — intended for various uses and with varying valuations. Examples include Bitcoin and Ethereum.

•   Tokens: Tokens are programmable assets that are created on an existing blockchain network, and allow users to access certain services or features. They are often distributed via airdrops, staking rewards, and private sales.

While crypto coins operate on their own independent blockchain and offer a broader medium of exchange for that network, tokens are built on top of an existing blockchain and have any number of uses, such as representing an asset — a stake in a precious metal, for example — or facilitating a transaction on the blockchain. Both could potentially be bought or sold through a crypto exchange.

Crypto coins are created, tracked, and verified by their native blockchain network and essentially power the blockchain by serving as payment for the transactions that create and secure new blocks. While crypto coins are fundamentally different from traditional fiat currencies (like the dollar, euro, or yen), they also have some similarities, since both are designed to be a medium of exchange and a unit of value.

Tokens are designed to be used as part of a software application, such as granting access to an app, verifying identity, or tracking products moving through a supply chain. They can represent units of value, too, including for real-world items, like real estate, points, or commodities. They can also represent digital art — as with non-fungible tokens (NFTs). There have even been experiments using NFTs to represent physical assets, such as real-life art and real estate.

Numerous crypto coins and tokens have been introduced at a rapid pace since Bitcoin was launched in 2009, and while this can drive innovation, it’s important to remember that cryptocurrencies come with high risk, as well, such as from scammers counterfeiting tokens or from the high level of volatility these assets experience.

Type 1: Proof of Work (PoW) Cryptocurrencies – The Originals

Proof of work is the original framework Bitcoin was built upon, and it represents the mechanism by which new blocks are added to the blockchain. In a proof of work system, “miners” compete to solve complex mathematical puzzles and earn cryptocurrency.

What Is Proof of Work?

Proof of work is a consensus mechanism, which is a standard that governs how cryptocurrency transactions are validated and information is added to a blockchain network. It allows crypto miners to compete for an opportunity to add a block to the blockchain, and receive a reward for their efforts.

With proof of work, crypto miners use powerful computer systems to race to solve a cryptographic hashing puzzle. The winner creates a new block containing transaction information, which is verified by the network nodes before being added to the chain.

The rewards earned by winning miners are typically a certain number of newly minted coins.

Examples of PoW Coins

Proof of work coins are represented by some of the most well-known types of cryptocurrency. Some of the most popular PoW coins by market cap include:

•   Bitcoin (BTC)

•   Dogecoin (DOGE)

•   Bitcoin Cash (BCH)

•   Litecoin (LTC)

•   Ethereum Classic (ETC)

Bitcoin is the largest PoW coin with a market cap of $1.3 trillion, as of July 2026. There are currently just over 20 million Bitcoins in existence, out of a maximum hard cap of 21 million. The last Bitcoin is expected to be mined sometime in 2140.

Type 2: Proof of Stake (PoS) Cryptocurrencies – The Evolution

Proof of stake cryptocurrencies were developed as an alternative to proof of work coins, which are viewed as having scalability limitations given the vast amounts of power required to mine them. A proof of stake system relies on crypto staking, rather than mining, but it serves a similar function.

What Is Proof of Stake?

Proof of stake is a consensus mechanism that’s used to reward participants who validate transactions that are added to the blockchain.

Here’s how it works:

•   Stakers agree to lock away some of their cryptocurrency on a blockchain network through a process called staking.

•   The blockchain network can use the holdings to create a new block and validate transactions.

•   The staker with the largest “stake” has a higher probability of being chosen to validate transactions.

•   Validated transactions earn the staker a reward; stakers who violate protocols, however, could face a penalty.

Proof of stake requires much less computing power than proof of work, reducing strain on the energy grid. It allows stakers an opportunity to potentially earn passive income while holding cryptocurrency. However, stakers face the risk that their coins could lose value while they’re locked up for staking.

Examples of PoS Coins

Compared to Bitcoin, proof of stake coins claim a smaller share of the market. However, the numbers are growing, and these coins represent some of the biggest movers in terms of market cap:

•   Ethereum (ETH)

•   Solana (SOL)

•   Cardano (ADA)

•   Toncoin (TON)

•   Algorand (ALGO)

Ethereum has the largest market cap overall of these, at approximately $296 billion as of August 30, 2026.

Type 3: Utility Tokens – The Keys to a Network

Utility tokens, or user tokens, are a type of cryptocurrency that serves a specific purpose inside a decentralized network. They’re built on an existing blockchain and grant their holders access to distinct functions, features, or services.

What Are Utility Tokens?

A utility token is a digital asset that grants holders access to a certain product or service for a given cryptocurrency. They’re typically developed using smart contracts and may be programmed for a range of uses, such as to access storage space or to bring external data onto a blockchain network. Or, as with a governance token, they may give holders the option to vote on changes to a blockchain network.

More broadly, utility tokens can help encourage participation in and support of the crypto ecosystem they were designed for. They may serve as a loyalty bonus, for example, provide access to exclusive features, or other incentives for interacting with the network, all of which may help foster the growth of that crypto community.

Unlike other types of tokens that may confer a stake in an asset or a physical entity, utility tokens serve primarily as a key to various features offered by a cryptocurrency.

Examples of Utility Tokens

Utility tokens are designed with specific use-cases in mind. Their value is typically measured more in terms of what they allow you to do, versus what value they represent.

Here are some examples of utility tokens:

•   Ether (ETH): Ether is the native token of Ethereum, which is the second-largest blockchain network. Ether is used to pay the Ethereum “gas fee” required to process transactions on the blockchain. Given its reach, however, it’s sometimes seen as a currency (having a store of value) in its own right.

•   Chainlink (LINK): Chainlink is a decentralized oracle network that acts as a bridge between smart contracts and real-world data. Tokens are used to pay for data services and incentivize the production of accurate data feeds.

•   Basic Attention Token (BAT): BAT is an Ethereum-based utility token used within the privacy-focused Brave browser ecosystem. Users earn BAT by opting into ads; they can use their tokens to tip content creators, cash out, or unlock premium content and digital rewards.

•   Golem (GLM): Golem is a decentralized supercomputer that lets users rent their computing power to others. Tokens are used to pay for services through the platform.

•   The Sandbox (SAND): SAND is the utility token for the community-driven blockchain gaming platform, The Sandbox. Players can earn SAND and use it to purchase virtual assets, access exclusive interactions, and take part in governance, among other things.

Type 4: Stablecoins – The Price Stability Anchor

Stablecoins are digital assets whose value is tied or “pegged” to another asset, typically the U.S. dollar. Unlike Bitcoin and other cryptocurrencies, which can be highly volatile speculative assets, stablecoins are designed to maintain a relatively stable value, pegging their value to traditional currencies to facilitate digital payments and transfers with less price volatility than many other crypto assets.¹

What Are Stablecoins?

The regulatory landscape for stablecoins is quickly evolving globally, highlighted by the passing of the US. Genius Act in July 2025, which targets payment stablecoin issuers and introduces strong consumer protections.² This parallels the European Union’s Markets in Crypto-Assets (MiCA) regulation, which rolled out its foundational stablecoin rules in 2024.³ Under MiCA, stablecoin issuers face rigid requirements, such as mandating that a significant portion of reserves be held as cash deposits in EU credit institutions rather than solely in U.S. government debt. Consequently, major issuers like Tether (USDT) — which maintains the vast majority of its reserves in U.S. Treasurys — have faced delisting from regulated European platforms due to noncompliance.

As the industry shifts, there are still risks to be aware of, such as a stablecoin losing its peg value, technology or operational risks, or the potential for scams or fraud.

Common uses for stablecoins include:

•   Paying for goods and services

•   Making cross-border payments

•   Offering potential protection against price instability in cryptocurrency markets

Crypto users may use stablecoins to buy other cryptocurrencies in lieu of cash, and more payment processors are allowing the use of these coins to pay for transactions online.

Examples of Stablecoins

Stablecoins represent a growing share of the total cryptocurrency market. Some of the most well-known stablecoins by market cap include:

•   Tether (USDT)

•   USDC (USDC)

•   USDS (USDS)

•   Dai (DAI)

•   PayPal USD (PYUSD)

The total market cap of stablecoins was approximately $309.88 billion as of July 2026. With a few exceptions, stablecoins have a relatively low price point compared to other types of cryptocurrency. For stablecoins, this low price point is by design rather than market dynamics.

Type 5: DeFi Service Providers – The Future of Finance

DeFi service providers represent a subset of the cryptocurrency landscape. They operate on decentralized, blockchain-based frameworks in order to offer services that allow individuals to conduct transactions directly. For example, a DeFi coin is similar to a physical coin in that it transfers value, but it does so without going through a central intermediary.

What Is Decentralized Finance (DeFi)?

Decentralized finance, or DeFi, describes financial services that are executed through the blockchain. By allowing for direct, peer-to-peer transactions, DeFi advocates note that it could help reduce barriers to entry for those who traditionally have a harder time accessing financial services, and allow for potentially faster, cheaper transactions.

Some of the top providers building out the decentralized finance landscape are developing decentralized peer-to-peer exchanges, borrowing and lending protocols, data services through decentralized oracle networks (DONs), and stablecoins, which may help provide a bridge between blockchain systems and traditional assets.

Most, though not all, DeFi protocols and applications are built on Ethereum. DeFi tokens can be used to access services and goods through decentralized apps. Though DeFi tokens represent a smaller share of the cryptocurrency market, their popularity is growing.

DeFi, of course, is in its early stages, and while the blockchain technology itself helps to safeguard information, the other apps, systems, and entities that interact with the network could pose risks. It’s important to be cautious when considering options, especially as crypto regulations continue to develop.

Examples of DeFi Tokens

Here are some of the largest DeFi tokens by market cap:

•   Hyperliquid (HYPE)

•   Decimal (DEL)

•   Chainlink (LINK)

•   Stellar (XLM)

•   Dai (DAI)

As of July 2026, the total DeFi crypto market capitalization sits at approximately $61 billion. It’s essential to distinguish between DeFi tokens and DeFi coins. The difference, again, between tokens and coins is how they relate to the blockchain.

Type 6: Privacy Coins – The Anonymous Transactions

Privacy coins offer anonymity by obscuring certain details about their users. These coins can be sent and received anonymously, without disclosing the location of the parties involved in the transaction.

What Are Privacy Coins?

Privacy coins enable the secure transfer of cryptocurrency without revealing either its origin or destination. This is a key departure from the more public nature of transactions conducted on the blockchain. Public blockchains were designed with the idea that information be transparent and immutable, allowing participants to view and validate the data. With Bitcoin, for example, Bitcoin users can access transaction data (though not identity information) through public Bitcoin addresses used to make payments.

A privacy coin blocks certain information from view through the use of different strategies, including:

•   Protocols that generate stealth addresses

•   Mixing of transactions to make the routing of coins more difficult to trace

•   Tools that allow for the validation of transactions without requiring the disclosure of any identifying information

Privacy coins aren’t accessible in every country or crypto market. Some countries have banned them outright, while others have taken steps to remove some of the secrecy surrounding them.

For example, recent anti-money laundering regulations passed by the European Union will, starting in 2027, ban financial and credit institutions as well as crypto-asset service providers from managing cryptocurrencies that offer anonymous accounts.

Examples of Privacy Coins

The market for privacy coins is smaller than other types of cryptocurrencies, and your ability to buy them may depend on where you live. Examples of popular privacy coins include:

•   Monero (XMR)

•   Zcash (ZEC)

•   Beldex (BDX)

•   Decred (DCR)

•   Dash (DASH)

As of July 2027, the privacy coin market is valued at approximately $15 billion. A glance at pricing charts shows that privacy coins have the potential to be exceptionally volatile.

Type 7: Meme Coins – The High Risk, High Reward Speculation

Meme coins are a type of cryptocurrency whose popularity is driven by memes or trends.

What Are Meme Coins?

Meme coins are coins that gain attention because they align with a trend or newsworthy event. Any coin can become a meme coin if someone or something pushes it into the spotlight. Some of the most popular meme coins can develop cult-like followings, which can help drive demand.

Compared to other types of cryptocurrency, meme coins tend to be more volatile because their value is often tied to their popularity. A coin that’s hot today may not be tomorrow, and its value could quickly fizzle if the trend dies down, or the meme that the coin is associated with loses popularity.

Examples of Meme Coins

Meme coins can sometimes be some of the most recognizable cryptocurrencies if they grab the attention of the broader population. Examples of popular meme coins include:

•   Dogecoin (DOGE)

•   Shiba Inu (SHIB)

•   Pepe (PEPE)

•   Pudgy Penguins (PENGU)

•   Bonk (BONK)

Meme coins often have lower prices than other cryptocurrencies. As of July 2026, meme coins had a market cap of $34.7 billion.

The Critical Impact of Tax Treatment

The IRS treats cryptocurrency and other digital assets as property, meaning that any gains you generate from them are taxable. If you have digital asset transactions during the year, you’re required to report them on your tax return.⁴

The sale of digital assets, including cryptocurrency, can trigger capital gains if you sell at a profit, or capital losses if you sell for less than the original purchase price. Selling off crypto assets after seeing huge gains in value could significantly increase your tax liability for the year.

You may be able to offset gains with losses through a process known as tax loss harvesting. That can reduce what you owe in federal taxes for the current year.

Income earned through cryptocurrency activities, such as from mining rewards, is considered ordinary income. Depending on your circumstances, the tax rules applying to your digital assets could get complicated. This is not financial, legal, or tax advice so you may want to talk to a certified public accountant (CPA) or another tax professional about how crypto assets could affect your overall tax picture.

The Takeaway

Cryptocurrencies are digital assets built on distributed ledger networks, generally guided by the principle of decentralization. However, they are not a uniform asset class. They vary by consensus mechanism — such as proof of work and proof of stake — and by functional design, including stablecoins, utility tokens, and decentralized finance (DeFi) governance tokens.

Because different cryptocurrencies serve distinct goals, functionalities, and markets, they carry vastly different risk profiles. Understanding these differences can help you better evaluate how specific digital assets align with your risk tolerance and broader financial goals.

SoFi Crypto is back. SoFi members can now buy, sell, and hold cryptocurrencies on a platform with the safeguards of a bank. Access 25+ cryptocurrencies, such as Bitcoin, Ethereum, and Solana, with the first national chartered bank to offer crypto trading. Now you can manage your banking, investing, borrowing, and crypto all in one place, giving you more control over your money.

FAQ

How many types of cryptocurrencies are there?

Broadly speaking, cryptocurrencies can be grouped into coins and tokens. Beyond those two main types, there are millions of different types of crypto being exchanged, with new currencies entering the market regularly.

What is the most common type of cryptocurrency?

Bitcoin is the most common and widely recognized cryptocurrency. Launched in 2009 by an anonymous developer or group of developers named Satoshi Nakamoto, it was the first decentralized digital currency. It remains the largest cryptocurrency by market capitalization and serves as the benchmark for the entire digital asset industry.

What is the difference between a coin and a token?

The main difference between a coin and a token is their relationship to the blockchain. Coins are the native digital currency of their blockchain, while tokens sit on top of an existing blockchain. Tokens are often associated with digital currencies, but they can also represent other digital assets, like NFTs, or something intangible, like voting rights.

Are NFTs a type of cryptocurrency?

NFTs or non-fungible tokens are not a type of cryptocurrency, but they share space with crypto on the blockchain. An NFT represents ownership of a unique digital or physical asset, such as a drawing, image, or piece of artwork.

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Sending cryptocurrency from one wallet to another can seem intimidating at first, especially since blockchain transactions are generally permanent once they are confirmed. But whether you’re moving Bitcoin, Ethereum, or any other type of cryptocurrency, the core steps involve understanding your wallet, the blockchain network, and the recipient’s public address. This guide will walk you through what you need to know to confidently and securely send crypto, from choosing the right wallet to confirming your transaction and avoiding common pitfalls.

How to Send Crypto to a Wallet: Step-by-Step

The steps to send crypto can vary by wallet, but this is a basic overview of the process.

Step 1: Open Your Wallet and Choose Send

Log in to your wallet, then choose the option to “send” or “withdraw” crypto from the menu.

Step 2: Select the Crypto Asset to Transfer

If you hold multiple cryptocurrencies in the same wallet, you’ll need to select the one you want to send. Note that some wallets may require you to choose the type of cryptocurrency you want to transact in first, before you can select the send option.

Step 3: Input the Destination Wallet Address

Add your recipient’s wallet address in the “recipient” field. This will typically be a long string of numbers and letters and it needs to be exact.

Best Practice: Copy and Paste the Address

Ideally, you want to copy and paste your recipient’s address or, if your wallet allows, scan a QR code provided by the recipient. Either option can help you avoid the kind of errors that can happen with manual entry.

Crucial Rule: Double-Check the Public Code

Since crypto transactions are irreversible, you’ll want to make sure the address is correct. Even if you use the copy and paste feature, still double-check that the full address has been copied correctly.

Step 4: Specify the Amount of Crypto to Send

Next, you’ll enter how much crypto you want to send. Make sure you have enough in your crypto balance to cover the transaction as well as the transaction fee.

Crypto Value vs. Fiat Currency Amounts

You may have the option to enter the amount you want to send in cryptocurrency or in fiat currency (government-backed money such as U.S. dollars). If this is an option, the wallet will typically do the conversion for you.

Step 5: Add a Memo or Destination Tag if Needed

You may be asked to add a memo or destination tag before you can send crypto to another wallet. Destination tags or memos help identify who should receive the crypto you send and are separate from their public address.

Why Memo Tags Are Required for Exchanges

Some crypto exchanges use one wallet address for all users. Adding the destination tag/memo helps ensure the crypto you’re sending goes to your recipient’s account. If you’re sending crypto to someone with a private wallet (such as a desktop or hardware wallet or a noncustodial app), you don’t need to include a destination tag/memo.

Step 6: Check the Estimated Blockchain Fee

Take note of the transaction fee — it will be calculated automatically based on current network conditions. You may have the option to adjust the fee. However, this may impact the speed of the transaction.

How Gas Fees Impact Processing Times

Higher crypto transaction fees generally lead to faster processing because it incentivizes miners or validators to prioritize your transaction. If you need your transaction to be confirmed quickly, you’ll want to go with a higher fee. Transactions with lower fees may only be processed when network activity is low.

Step 7: Finalize and Confirm the Transfer

Once you’ve entered everything you need to send crypto to another wallet, look over it again. Confirm the recipient’s wallet address, the amount you’re sending, and the fee. If everything looks good, you can go ahead and hit “Send” or “Confirm.”

Step 8: Track the Transaction on a Block Explorer

Once you’ve sent your transaction, it will show up as “pending” in your wallet until it’s confirmed by the network. If you want to know exactly where your transaction is on the network, you can enter your transaction ID into a blockchain explorer to view its status in real time.

What Is a Crypto Wallet and How Does It Work?

A crypto wallet is software (or sometimes hardware) that lets you store, manage, and transact with your cryptocurrencies. Despite the name “wallet,” you don’t actually hold coins inside it in the traditional sense. Instead, a crypto wallet holds keys (public and private) that grant access to your crypto on the blockchain.

Wallets come in various forms, including mobile apps, hardware devices, and even paper (where you simply write or print-out your private and public keys). Paper and hardware wallets are referred to as “cold” wallets, since they’re not connected to the internet. Online wallets are “hot” wallets since they are connected to the internet. Regardless of the type of wallet you use, your cryptocurrency always remains on the blockchain.

How Public and Private Keys Protect Data

Sending and receiving crypto requires a public and private key. Here’s what they are and how they differ:

•   A private key is a string of numbers and letters that unlocks the right to access and spend your cryptocurrency. You can think of it as being similar to the username and password you use to log in to your bank account. Each time you send crypto, the transaction is signed with your wallet’s private key.

•   A public key is a string of numbers and letters that allows you to receive cryptocurrencies sent by other people. It’s mathematically derived from the private key and is used to generate your public (or wallet) address. You can think of it as similar to your bank account and routing number, which you might share with certain trusted groups to allow them to send you money.

Your crypto wallet also has a seed phrase (also known as a recovery phrase). This phrase, which is a random combination of 12 to 24 words, helps you recover all the private keys in your wallet, even if the wallet itself is deleted or lost.

Public keys are meant to be shareable, while private keys and seed phrases should never be shared. Anyone who has your private key or seed phrase could access your crypto wallet and its holdings.

Your Public Crypto Address Explained

A public address, also known as wallet address, corresponds to a specific cryptocurrency stored in a crypto wallet. It works similarly to an email address in that it provides enough information to direct funds into an account without jeopardizing the wallet’s security.

Your public address is what allows you to complete transactions using cryptocurrency. If someone wants to send crypto to you, they’ll need your wallet address. If you want to send crypto to someone else, you’ll need their wallet address. The format your public address takes is tied to the type of cryptocurrency you hold. A typical wallet address is about 40 characters long and it’s important to make sure you have the correct address before hitting “send”.

What to Know Before You Transfer Crypto

Before you get into sending crypto between wallets, it’s important to make sure everything is set up correctly.

Choose the Right Wallet Strategy

Which wallet you use will have an impact on both ease-of-use and security. Here are some options to consider:

•   Mobile wallets (phone apps): With a mobile wallet, your public and private keys are stored and encrypted within the app, enabling you to access funds from anywhere with an internet connection. This makes them convenient for frequent transactions. However, their constant online connectivity means they may be vulnerable to cyberattacks.

•   Desktop wallets (software on PC/Mac): A desktop wallet securely stores your public and private keys on your computer or laptop. This type of wallet typically provides more features and controls than a mobile wallet, along with a larger screen. Since it’s always connected to the internet, it carries similar risks to a mobile wallet.

•   Hardware wallets: This is a physical device (often the size of a USB drive) designed to store cryptocurrencies offline securely. It requires some extra steps to use, but typically offers the highest level of security. Even if your computer is compromised, your private keys remain offline.

•   Custody wallets: Many crypto exchanges offer proprietary wallets. They are known as “custodial wallets” because the exchange holds and manages the private keys for the user. These wallets can be convenient and beginner-friendly, but also may be vulnerable to hacks and other security breaches, as well as potential restrictions or freezes by the provider.

Select the Correct Blockchain Network

If you’re using a crypto exchange to make a transfer, you may be prompted to choose a network. If so, it’s important to select the network that’s compatible with the cryptocurrency you’re sending and the recipient’s wallet. Here’s why.

Why Blockchain Networks Matter

Each cryptocurrency operates on its own (or a compatible) blockchain network. Examples of blockchain networks include Bitcoin (BTC), Ethereum (ETH), BNB Smart Chain (BNB), Polygon (MATIC), Solana (SOL), and Litecoin (LTC).

Risks of Using the Wrong Crypto Network

Sending cryptocurrency to the wrong network can lead to slower, costlier, and (if the networks aren’t compatible) lost transactions. Here’s a closer look at the potential fallout:

•   Incomplete transactions: Choosing the incorrect network may cause the transaction to fail, requiring you to contact customer support and possibly incur additional fees.

•   Slower transaction times: Different networks have different transaction times. Selecting the appropriate network helps ensure your transactions are completed quickly and efficiently.

•   Permanent loss of funds: If you send cryptocurrency to an incompatible network (such as sending Bitcoin to an Ethereum address), your funds could be lost permanently.

How Crypto Network Gas Fees Work

When you send a cryptocurrency, you typically pay a fee for using the blockchain network. These fees, sometimes referred to as “gas” fees, help incentivize miners or validators to verify transactions and maintain the blockchain network’s security. Fees vary depending on the network, type of transaction, the speed you opt for (fast transactions generally cost more than slow or average) and how busy the network is (you typically pay more when the network is congested). However, these fees tend to be low. For example, the median transaction fee for Bitcoin in July 2026 ranged between approximately $0.04 to $0.09.

Keep in mind that network fees typically aren’t the only fees involved in a crypto transaction. The crypto exchange you’re using will likely charge fees of its own, and online wallets that aren’t part of the crypto exchange may charge a small fee whenever you make a deposit or withdrawal.

Verify the Recipient’s Public Address

To send crypto, you’ll need to obtain the recipient’s wallet address. Since transfers are typically irreversible, it’s key to get the correct address. Here are some tips to help ensure you’re sending crypto to the right person:

•   Copy and paste the address: If possible, you want to avoid typing the address manually — one wrong or missing character can send your crypto to the wrong place. By copying and pasting, you reduce the chance of making a mistake.

•   Scan a QR code if available: Since crypto wallet addresses are long, many wallets will show an address as a QR code that you can scan in your crypto app. Be sure to still carefully verify the address associated with the QR code before sending, since QR codes have been targeted by malware scams in the past.

•   Always double-check the address before sending: It’s wise to go through each letter and number individually to make sure none are missing, out of order, or incorrectly capitalized. This is especially important if you manually type the address. Only send crypto after you’re sure the address is an exact match.

•   Send a test amount: One way to confirm an address is correct is to send a tiny amount from your wallet and then make sure the recipient gets it. If the test is successful, you can go ahead and send the full amount.

Best Practices for Safe and Secure Transactions

Crypto transactions generally lack the protections you get with traditional banking transactions. For example, you’re typically fully liable for losses if you send crypto to the wrong address or use the wrong network. Observing some best practices can help you stay safe when sending crypto (or receiving it).

The Golden Rule: Send a Small Test Transaction First

As mentioned, it’s wise to send a small test transaction before you send the full amount to your recipient. That way, you can make sure that you have the correct wallet address and network.

Triple-Check Everything: The Correct Crypto, Network, and Address

You have multiple opportunities throughout the crypto sending process to review the information you’ve entered, so take advantage of them. Look at the crypto network to make sure it’s the right one for the type of crypto you’re sending. Check the wallet address that it’s going to. This doesn’t take long to do, and it can help you avoid errors or mistakes in sending.

How to Avoid Common Crypto Transfer Scams

Cryptocurrency attracts plenty of scammers, and it’s important to know how to spot a scam before you fall victim to one. Common crypto scams include:

•   Get-rich-quick schemes where a “fund manager” offers the promise of high returns if you buy cryptocurrency and transfer it into their online account

•   Fake giveaways that require you to send crypto to claim your prize

•   Love interest/catfishing scams that trick you into buying or sending crypto

•   Free money scams that promise you more crypto if you first send a small amount

•   “Celebrity” scams that use a famous person’s name or likeness to give credibility to a fake crypto opportunity

•   Government scams where a person claiming to represent an agency tells you that you can solve a legal issue by purchasing cryptocurrency

•   Fake job listings that ask you to pay a fee in crypto to get more information about an open position or purchase “supplies” that you’ll need to do the job

•   Blackmail scams, in which someone claims to have “dirt” on you, like a compromising browser history or videos they plan to share with your friends and family if you don’t send crypto

To avoid being a victim of a crypto scam, be wary of any requests for crypto from people you don’t know, met online, or those who claim to be celebrities, government officials, or representatives of major companies. Also be sure to verify recipient details before you send any crypto. And above all, trust your gut. If something seems too good to be true, it probably is.

How to Safely Receive Crypto from External Sources

If you need to receive crypto, these steps can help ensure your coins arrive quickly and safely.

1. Ensure Network Compatibility

Before accepting a transfer of crypto, you’ll want to make sure the wallet or exchange you’re using supports the cryptocurrency you’ll be receiving. If the sender tries to transfer crypto from one blockchain to another, the tokens could get lost en route to your wallet.

2. Find and Share Your Public Address or QR Code

To find your public address, open your wallet app or software and navigate to the “receive” section. This is a string of numbers and letters, and may also be available as a QR code. You can share your address by copying the full alphanumeric string and pasting it into a message or email. If you have a QR code, you can send it as a picture or allow someone to scan it in person.

3. Confirm You’ve Received the Funds

You can confirm you’ve received the funds by checking the transaction history or balance in your crypto wallet. Or, you can monitor the transaction status on a public blockchain explorer using the transaction ID provided by the sender. A completed status on the block explorer signifies the funds are securely in your wallet.

Troubleshooting Delayed or Stuck Crypto Transfers

Every now and then, you may hit a snag when sending or receiving crypto. Knowing what to do can help you solve the issue.

Troubleshooting Delayed or Stuck Crypto Transfers

A pending or stuck crypto transaction can happen when the network is congested. This may occur when there are a lot of people using it to complete transactions, or if you or your sender selected a lower transaction fee. In other instances, a transaction can get stuck or be slowed down if the crypto exchange that you’re using loses contact with the network.

These situations are not ideal, but they are fixable. You’ve got a few options to get the transaction moving again.

Why Is My Crypto Transaction Pending?

If a transaction gets stuck, you may be able to speed things up by adjusting the fee. Some wallets offer a Replace-the-Fee (RBF) feature. This gives you the option to pay more to get your transaction moving. If you’re on the receiving end of a stuck transaction, you can ask the sender to adjust their fee.

The Takeaway

Sending crypto safely comes down to understanding how wallets, networks, and addresses work — and taking the time to double check every detail before hitting “send.” Once you master the basics and learn how to avoid delays and costly mistakes, you’ll be able to move crypto more confidently and quickly.

SoFi Crypto is back. SoFi members can now buy, sell, and hold cryptocurrencies on a platform with the safeguards of a bank. Access 25+ cryptocurrencies, such as Bitcoin, Ethereum, and Solana, with the first national chartered bank to offer crypto trading. Now you can manage your banking, investing, borrowing, and crypto all in one place, giving you more control over your money.

FAQ

Can you send crypto to an external wallet?

Yes, you can typically send cryptocurrency from major exchanges and digital wallets to an external wallet. The process generally involves navigating to the “send” or “withdraw” section of your wallet, selecting the specific asset, inputting the recipient’s accurate public wallet address, and finalizing the transaction. Always double-check that you have selected the correct blockchain network to ensure the transfer is processed accurately and to avoid the risk of permanent fund loss.

How do I transfer crypto into my account?

To transfer crypto into your account, you generally need to log in and navigate to the wallet or deposit section. Select the specific cryptocurrency you want to receive, then copy the unique deposit address or scan the provided QR code. Next, open the external wallet or exchange where your funds are currently held and paste this address into the send or withdraw field. Be sure to verify that the selected network matches exactly on both platforms to prevent potential loss. Finally, confirm the transaction and wait for the blockchain network to complete the verification.

What happens if I send crypto to the wrong address?

Crypto transactions are typically irreversible. If you send cryptocurrency to an incorrect wallet address, your funds may be lost permanently. Because there is often no central authority to reverse these blockchain transactions, you are usually fully liable for the loss. This is why it is critical to always copy and paste recipient addresses rather than typing them manually, and to double-check every character before finalizing your transfer. Sending a small test transaction first is a recommended best practice.

How long does a standard crypto transfer take?

Transfer times can range from immediate to several hours, depending on the specific blockchain network and current network congestion. High activity on the network can lead to delays. Additionally, the transaction fee you choose impacts speed; higher fees incentivize miners or validators to prioritize your transaction, while lower fees may result in slower processing. You can track the progress of your transfer in real-time by entering your transaction ID into a blockchain explorer.

Why do some crypto transfers require a memo tag?

Some crypto exchanges use a single custodial wallet address for all their users to manage assets efficiently. A memo or destination tag acts as an identifier, ensuring the funds you send are routed to the correct individual’s account within that exchange. If you are sending crypto to a private, noncustodial wallet (like a personal hardware or software wallet), a destination tag or memo is typically not required.

Photo credit: iStock/Jerome Maurice

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Bitcoin halving refers to the scheduled reduction in Bitcoin rewards that network validators, known as miners, receive for adding new blocks to the blockchain. Miners earn newly minted Bitcoin for validating groups of transactions, and roughly every four years, that reward is cut in half — this is what is referred to as “Bitcoin halving.”

This mechanism reduces the supply of new Bitcoins entering circulation, which increases scarcity and helps control inflation — one of Bitcoin’s foundational principles. Unlike government-issued fiat currencies which can be printed without limit, Bitcoin’s supply mechanism is engineered to ensure it is a finite, scarce digital asset.

At the most recent halving event in April 2024, the mining reward fell to 3.125 Bitcoin (BTC) per block. The next halving event, expected in April 2028, will reduce that reward again to 1.5625 BTC. The exact date depends on how quickly blocks are mined over time.

What Is Bitcoin Halving?

Bitcoin halving is the event in which the reward miners receive for validating blocks is reduced by half. Bitcoin’s total supply is permanently capped at 21 million coins, and once all Bitcoins have been mined, no additional coins will enter circulation. At that point, miners will rely entirely on transaction fees paid by network users.

How Does Bitcoin Mining Work?

New Bitcoins are created through a process called mining, in which specialized computers solve complex mathematical problems to validate transactions on the Bitcoin network. This process, known as “proof of work,” requires significant computational power and energy to secure the network against fraud and tampering.

Transactions are grouped into blocks, and miners compete to solve a cryptographic puzzle tied to each block. The first miner to solve the puzzle validates the transactions and adds the block to the blockchain. In return, the miner receives newly minted Bitcoins plus transaction fees paid by users.

The process serves two purposes: securing the network and introducing new Bitcoins into circulation.

The Role of Halving in Bitcoin Supply

Bitcoin’s supply cap of 21 million coins is enforced through its halving mechanism. On average, a new block is added to the blockchain every ten minutes. Currently, the block reward is 3.125 BTC. After the next halving in 2028, that reward will decline to 1.5625 BTC. By reducing the number of new Bitcoins entering circulation over time, halvings gradually lower the annual supply growth rate and reinforce Bitcoin’s scarcity.

Recommended: What Is a Crypto Wallet Address?

When Is the Next Bitcoin Halving?

Bitcoin halvings occur every 210,000 blocks. Since new blocks are mined roughly every 10 minutes, this block interval translates to about four years in calendar time. However, the actual date shifts depending on network activity.

The next Bitcoin halving event is expected to occur around April 2028.

Past Bitcoin Halving Dates

Here’s a timeline of previous Bitcoin halvings:

•   November 28, 2012: Reward reduced from 50 BTC to 25 BTC

•   July 9, 2016: Reward reduced from 25 BTC to 12.5 BTC

•   May 11, 2020: Reward reduced from 12.5 BTC to 6.25 BTC

•   April 20, 2024: Reward reduced from 6.25 BTC to 3.125 BTC

•   Expected in April 2028: Reward will be reduced from 3.125 BTC to 1.5625 BTC

Why Does Bitcoin Halving Happen?

Halving is built directly into Bitcoin’s code. Its purpose is to create a predictable and disinflationary monetary system by steadily reducing the issuance of new coins over time. By cutting mining rewards in half approximately every four years, Bitcoin’s protocol limits supply growth and reinforces scarcity as it approaches its maximum supply of 21 million coins.

This reduction in new supply can place upward pressure on prices if demand remains strong or increases. However, scarcity alone does not guarantee higher prices. Broader issues — including investor sentiment, institutional adoption, regulation, and macroeconomic conditions — also influence market prices.

Historically, halving events have often attracted significant attention and prompted more people to buy crypto, which has contributed to bullish market cycles. Still, there is no certainty that future halvings will produce similar price movements.

How Does Halving Affect Bitcoin Price?

In many past market cycles, Bitcoin prices have risen in the months leading up to a halving as investors invest and speculation increases. Price action on the actual day of the halving has been mixed, with some users buying with the hope of immediate gains and others choosing to sell.

Historically, the most significant price movements have occurred in the month following a halving rather than immediately during the event itself.

Historical Price Trends After Halvings

Historically, Bitcoin’s price has often increased during the year following a halving event.

For example:

•  Halving 2012: The price of Bitcoin rose from $12 in November 2012 to over $1,000 in November 2013.

•  Halving 2016: The price increased from $650 in July 2016 to approximately $2,500 in July 2017.

•  Halving 2020: The price rose from $8,000 in May 2020 to a new all-time high of over $69,000 in April 2021.

•  Halving 2024: The price moved from $63,762 in April 2024 to $83,671 in April 2025.

As you can see from the numbers, the usual post-having price bump after the 2024 halving was more muted than past cycles, which some analysts have viewed as a sign of a maturing of the market and growing institutional participation. Still, past performance does not guarantee future results, especially in the highly volatile cryptocurrency markets.

Recommended: How to Buy Crypto

What Happens When All Bitcoins Are Mined?

All 21 million Bitcoins are expected to be mined sometime around the year 2140. Once the final Bitcoin is issued, miners will no longer receive block rewards in the form of newly created coins.

Instead, miners will continue validating transactions and securing the network in exchange for transaction fees paid by users. These fees are expected to become the primary economic incentive supporting Bitcoin mining after issuance ends.

Future advancements in mining technology, increased efficiency, and a potential rise in fees may also play key roles in sustaining mining operations.

The Takeaway

Bitcoin halvings occur approximately every four years and reduce the mining reward paid to miners by 50%. Following the April 2024 halving, the current block reward stands at 3.125 Bitcoins. The next halving, expected in 2028, is projected to reduce that reward to 1.5625 BTC.

Historically, Bitcoin prices have often risen before and after halving events, although future market performance is never guaranteed. Halving will continue until Bitcoin reaches its maximum supply of 21 million coins, which is expected to happen around 2140.

SoFi Crypto is back. SoFi members can now buy, sell, and hold cryptocurrencies on a platform with the safeguards of a bank. Access 25+ cryptocurrencies, such as Bitcoin, Ethereum, and Solana, with the first national chartered bank to offer crypto trading. Now you can manage your banking, investing, borrowing, and crypto all in one place, giving you more control over your money.

FAQ

What happens during a Bitcoin halving?

During a Bitcoin halving, the reward given to miners for validating transactions and adding blocks to the blockchain is reduced by 50%. This event occurs automatically every 210,000 blocks (roughly every four years) as part of Bitcoin’s programmed supply schedule.

Does Bitcoin halving make mining harder?

No. Halving only reduces the block reward miners earn. It does not directly change mining difficulty. If lower profits force miners to shut down, the reduced competition also reduces mining difficulty, which helps miners to maintain the 10-minute average block time. Conversely, if halving drives higher miner competition, difficulty increases.

How often does Bitcoin halving occur?

Bitcoin halvings are programmatically hard-coded into the Bitcoin protocol to trigger exactly every 210,000 blocks mined. Because it takes roughly 10 minutes to mine a single block, the 210,000-block milestone is reached roughly every four years. Previous halvings occurred in 2012, 2016, 2020, and 2024. The next is expected in 2028.

Can you buy Bitcoin before a halving?

Yes, you can buy Bitcoin at any time, including before a halving event. Bitcoin trading markets operate 24 hours a day, seven days a week, without interruption.

What is the current BTC block reward?

The current Bitcoin block reward is 3.125 BTC following the April 2024 halving. It is expected to decline to 1.5625 BTC. after the next halving in 2028.

Photo credit: iStock/FreshSplash

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