What is Cryptocurrency?

Digital assets used as a medium of exchange that explicitly uses strong cryptography to regulate assets. In particular, the cryptography serves to secure financial transactions, control the creation of units, and verify the transfer of assets. This system controls currency without a need for a centralized banking system.

Cryptocurrencies are virtual currencies, allowing users to secure payments and conduct transactions online using digital tokens. They have the potential to disrupt financial institutions and the way banking and currency works. Cryptocurrencies have qualities that make them attractive to investors and users. For one they are inflation resistant, and also because they are overseen by a peer-to-peer network, there is also a level of transparency that isn’t present in traditional financial institutions.

Cryptocurrencies use decentralized digital networks to create and process digital currencies and transactions based on a unique technology called a blockchain. Cryptocurrencies in part derive their name from cryptography, a means of creating, studying, and securing protocols that prevent third parties from accessing private information. Some forms of cryptography were first developed for military applications. In fact, governments sought to subject cryptography to legal restrictions to prevent private citizens from using the technology. Freedom of speech eventually prevented this restriction from taking place.

Blocks, in a blockchain, are digital ledgers. The blocks hold transaction data and are connected to other blocks by cryptography. Blockchains are intended to ensure data integrity by making it difficult to alter the data it contains. To alter information in a block, after it is entered, would require consensus by all individuals overseeing the network. Since cryptocurrencies aren’t issued by a central authority, they are considered resistant to manipulation by governments.

While Bitcoin was the first and most well-known cryptocurrency, there has been a rise in cryptocurrencies including the following:

  • Litecoin
  • Ripple
  • Neo
  • Stellar
  • ZCash
  • Ethereum Classic
  • IOTA

Though Cryptocurrencies have promising applications, they are still plagued by some issues including volatile exchange rates, and illegal activity.

What people ask…

How do I get Cryptocurrency?
What is the best Cryptocurrency to invest in 2017?
Which is the best Cryptocurrency?
What is a Cryptocurrency And can a Cryptocurrency be considered a form of money?

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