In short: A cryptocurrency is a digital record of value on a shared network (a blockchain), usually with no central issuer; most have no company, profit or property behind them, and their price is pure market expectation.
Simply put: We separate the technology (the blockchain), the token (what the record stands for) and the price (what someone will pay today). The BIS (2018) found that bitcoin does not perform the functions of money and looks more like a speculative asset. In the EU, the MiCA Regulation requires providers to be authorised, but does not guarantee the price.
Example: You buy tokens for a fictional €100. If the price falls by 60%, €40 is left — with nothing behind it for the price to return to.
Watch out: Money on a crypto exchange is not a bank deposit; the €100,000 deposit guarantee does not cover it. "Guaranteed returns" are a red flag.
Example: Bulgaria — since 1 July 2026 only providers licensed by the Financial Supervision Commission (FSC), or by another EU country with notification to the FSC, may offer crypto-asset services; crypto income is declared in the annual tax return. Source: https://www.fsc.bg/wp-content/uploads/2026/07/saobsthenie-do-investitorite-v-kriptoaktivi.pdf
Check in your country — look the provider up in ESMA's MiCA register; ask your tax authority about crypto income.
Source: BIS, Annual Economic Report 2018, ch. V — https://www.bis.org/publications/aer-2018/cryptocurrencies-looking-beyond-hype · Regulation (EU) 2023/1114 (MiCA) — https://eur-lex.europa.eu/eli/reg/2023/1114/oj