04/10/2023
WHAT IS CRYPTOCURRENCY?
Cryptocurrency is a type of digital or virtual currency that uses cryptography for security. Unlike traditional currencies issued by governments (like the US dollar or the euro), cryptocurrencies are decentralized and typically operate on blockchain technology. Here are some key characteristics of cryptocurrencies:
(1) Digital and Decentralized: Cryptocurrencies exist purely in digital form and are not controlled by any central authority, such as a government or central bank. Instead, they rely on a decentralized network of computers (nodes) to verify and record transactions.
(2) Blockchain Technology: Most cryptocurrencies operate on a blockchain, which is a distributed ledger that records all transactions across a network of computers. This technology ensures transparency and security.
(3) Cryptography: Cryptocurrencies use cryptographic techniques to secure transactions and control the creation of new units. Public and private keys are used to authenticate and secure ownership.
(4) Ownership and Transactions: Users hold cryptocurrencies in digital wallets, which are software or hardware tools for managing and storing their digital assets. Transactions between wallets are recorded on the blockchain.
(5) Limited Supply: Many cryptocurrencies have a limited supply, meaning there is a maximum number of coins that can ever be created. Bitcoin, for example, has a cap of 21 million coins, which is programmed into its protocol.
(6) Pseudonymity: Cryptocurrency transactions are often pseudonymous, meaning that while transaction details are recorded on the blockchain, the identities of users are not necessarily linked to their wallet addresses.
(7) Global and Borderless: Cryptocurrencies can be transferred and received by anyone with an internet connection, making them borderless and accessible to people worldwide.
(8) Volatility: Cryptocurrency prices can be highly volatile, with significant price fluctuations over short periods.
