Definition

Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates independently of a central bank. Unlike traditional currencies (fiat money), cryptocurrencies are decentralized and typically built on blockchain technology, making them resistant to government interference or manipulation.

The first and most well-known cryptocurrency, Bitcoin, was created in 2009 by an anonymous person or group using the pseudonym Satoshi Nakamoto. Since then, thousands of alternative cryptocurrencies (altcoins) have been created, each with unique features and use cases.

Key Points

  • Decentralized: No single authority controls the currency; it's maintained by a distributed network of computers
  • Secure: Uses advanced cryptography to secure transactions and control the creation of new units
  • Transparent: All transactions are recorded on a public ledger (blockchain) that anyone can verify
  • Borderless: Can be sent anywhere in the world without traditional banking limitations
  • Limited Supply: Most cryptocurrencies have a capped maximum supply, making them potentially deflationary

Example

When you send Bitcoin to someone, the transaction is broadcast to the Bitcoin network, verified by miners, and permanently recorded on the blockchain. No bank or government is involved—just a peer-to-peer transfer secured by mathematics.

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