Here's a look at three of the most common cryptocurrencies, how they work, and why you need to get savvy on this emerging trend in the coming year, particularly when it comes to your investment portfolio.

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The base word "crypto" refers to the cryptography that's used to verify transactions and keep the virtual asset secure.

Bitcoin was the first successful cryptocurrency after it came online in 2009 as a "peer-to-peer electronic cash system." By allowing people to transact with one another directly, without a middleman, cryptocurrency is highly disruptive and anticipated to grow leaps and bounds in coming years.

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As it stands, when you buy something or pay someone for a service, you might use a check, a credit card, or Pay Pal and that introduces a middleman that acts as a gatekeeper and charges a fee to facilitate your transaction.