A cryptocurrency is a digital currency that uses cryptography to control its creation and management, rather than relying on central authorities. It’s similar to money in many ways (including the fact that it can be used to buy pretty much anything), but unlike money, there is no physical representation of a cryptocurrency; all transactions are recorded in a public distributed ledger called the blockchain. Cryptocurrencies are not controlled by any one entity or even any one organization; they are decentralized.
There are a lot of misconceptions about what cryptocurrencies are and how they work. We hope you’ll find this blog useful for understanding them.
A cryptocurrency is like money, only it’s digital. If you have a bank account and your bank credits you with money when you earn interest, then you are holding some kind of currency. If your bank credits you with money because they want to keep up their profits, then they are lending you some sort of currency.
The difference between currencies and cryptocurrencies is that the currency in your bank account has a government behind it; the government guarantees that at least the amount of money it has promised to print will be printed. Cryptocurrencies don’t have governments behind them; they are just numbers in computers or on pieces of paper.
The way a cryptocurrency works is that people who have computers can agree to trade with each other by exchanging these numbers. The advantage is that people who own lots of those digital numbers can make lots of money by trading them for things the rest of us have decided we want. For example, if I have one bitcoin, and I trade five bitcoins for three pizzas from Papa John’s, and my friend trades 10 bitcoins for one pizza from Papa John’s, then I am pretty much guaranteed to make more money than my friend.
Of course, there are also disadvantages: if there are lots of people trying to trade their bitcoins for things like pizza
Cryptocurrency is a digital currency that uses cryptography for security. It is the most popular type of alternative currency.
Bitcoin (BTC) is the best-known cryptocurrency, but there are many others. Ethereum and Litecoin are other common ones. In some cases, people buy cryptocurrencies by exchanging real money – dollars or pounds sterling, for instance – for a virtual currency that they can use to pay for things online.
Cryptocurrency is also used in “initial coin offerings” – where a whole new cryptocurrency project is started, sometimes raising millions of pounds in a few days.
Cryptocurrencies are electronic money. They’re all about private money, not government money, and they’re all about being private money that can be transferred from one person to another without going through a bank or clearing house or a financial institution of any kind.
The most popular cryptocurrencies are Bitcoin and Ethereum. Bitcoin is the first cryptocurrency, invented in 2009 by pseudonymous Satoshi Nakamoto (or maybe not; maybe he’s just a pseudonym). Ethereum is a cryptocurrency that supports smart contracts: programs that are automatically executed when certain conditions are met.
Bitcoin was the first cryptocurrency, the first decentralised digital currency. Bitcoins are generated and have value – at least for now – because a bunch of computers in Iceland keep solving an algorithm that gets harder and harder to solve every time it’s run.
Bitcoin is a way of moving wealth around, like money or a cheque. But it is not money. Bitcoin doesn’t exist in physical form; it exists as a string of digits sitting on your computer. If you have one bitcoin it is worth one bitcoin, but if you have more than one bitcoin, they are all worth exactly the same.
Bitcoin works because there are very few bitcoins in circulation. This means that all payments can be made directly between people without going through any central authority, like a bank or government. For this reason bitcoin has become widely known as “digital gold”.
Cryptocurrency is a digital money that uses cryptography to secure transactions.
It is not just any old digital money. It is a new kind of money: it is based on computer code, not paper, and it works without a central repository or single administrator.
The idea of cryptocurrency was first described in an academic paper published in 1998 by cryptographer David Chaum, but the first practical implementation did not come until 2008 with the creation of Bitcoins.
Many people, including those who built the Internet, did not realize that a key way the web would change human life was by making it possible to create computer programs that do exactly what they are told.
A long time ago someone invented a way to put words and numbers in such a program. These were called “programs” and no one paid much attention to them, because they were very hard to understand. But in recent years a few of these programs have become so useful that people started to think how they might be improved. And after that, their inventors realized they could make something better still by putting the words and numbers into a program that runs on people’s computers around the world rather than on computers in their own offices. The result is called “bitcoin,” which is an alternative currency that you can use just like dollars or euros or yen.
Bitcoin is a very new invention, but it has been around from the start of 2011 until today, which is longer than many other new inventions take to become established.