Cryptocurrency is a type of digital or virtual currency that uses cryptography for security. Unlike traditional currencies issued by governments (like dollars or euros), cryptocurrencies operate on decentralized networks based on blockchain technology—a distributed ledger that records all transactions across a network of computers.
Key Features of Cryptocurrency:
- Decentralization: Cryptocurrencies are typically not controlled by any central authority like a government or financial institution.
- Blockchain Technology: Transactions are recorded on a public, tamper-resistant ledger, ensuring transparency and security.
- Cryptography: Advanced cryptographic techniques secure transactions, control the creation of new units, and verify the transfer of assets.
- Peer-to-Peer Transactions: Users can send and receive payments directly without intermediaries, reducing fees and increasing speed.
- Global Accessibility: Cryptocurrencies can be used worldwide, enabling borderless transactions.
Popular Cryptocurrencies:
- Bitcoin (BTC): The first and most widely recognized cryptocurrency, often referred to as "digital gold."
- Ethereum (ETH): Known for its smart contract functionality and decentralized applications.
- Litecoin (LTC): Designed for faster and cheaper transactions compared to Bitcoin.
- Stablecoins: Cryptocurrencies like USDT or USDC are pegged to stable assets like fiat currencies.
Uses of Cryptocurrencies:
- Digital payments and remittances.
- Investment and speculation.
- Development of decentralized applications (dApps).
- Tokenization of assets and NFTs.