Cryptocurrency or crypto, is a form of currency that exists digitally or virtually and uses cryptography to secure transactions. Cryptocurrencies don't have a central issuing or regulating authority, instead using a decentralised system to record transactions and issue new units. It has received it's name due to the fact that advanced encryption is used to secure and enable transactions.
The crypto payment system doesn't rely on banks to verify transactions. It’s a peer-to-peer system that can enable anyone, anywhere, to send and receive payments.
Instead of being physical money carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries to an online database describing specific transactions.
When you transfer cryptocurrency funds, the transactions are recorded in a public ledger. Cryptocurrency is stored in digital wallets.
The first cryptocurrency was Bitcoin, which was founded in 2009 and remains the best known today. Much of the interest in cryptocurrencies is to trade for profit.
Can I get more details on how cryptocurrency works?
Cryptocurrencies run on a distributed public ledger called blockchain, a record of all transactions updated and held by currency holders.
Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complex mathematical problems that generate coins. Users can also buy the currencies from brokers, then store and spend them using crypto wallets.
If you own cryptocurrency, you own a key that allows you to move a record or a unit of measure from one person to another directly, without a regulator third party involved.
Although Bitcoin has been around since 2009, cryptocurrencies and applications of blockchain technology are still emerging in financial terms, and more uses are expected in the future. Transactions including bonds, stocks, and other financial assets could eventually be traded using the technology.