Cryptocurrency is a type of digital or virtual currency that uses cryptography for security. It's decentralised, meaning it operates independently of a central authority like a government or bank. This decentralisation is often achieved through a technology called blockchain, a distributed ledger that records all transactions across a network of computers.
A cryptocurrency (or “crypto”) is a form of payment that can circulate without the need for a central monetary authority such as a government or bank. Instead, cryptocurrencies are created using cryptographic techniques that enable people to buy, sell or trade them securely.
Nearly 17,000 different cryptocurrencies are traded publicly and cryptocurrencies continue to proliferate. The total value of all cryptocurrencies in early 2022, was about $2 trillion, having fallen off an all-time high above $2.9 trillion late in 2021.
Cryptocurrencies are based on blockchain, a distributed public ledger that keeps track of all transactions that are updated and held by currency holders.
Cryptocurrency units are created through a process known as mining, which involves using computer power to solve complex mathematical problems that result in coins. Users can also purchase the currencies from brokers and spend them with crypto wallets.
You don’t own anything tangible if you have cryptocurrency. You own a key that allows you to transfer a record or a unit of measurement from one person to another without the assistance of a third party.
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Once you’ve purchased bitcoin, you’ll need to keep it safe to avoid being hacked or stolen. Cryptocurrencies are typically stored in crypto wallets, which are physical hardware or online software that securely store the private keys to your cryptocurrencies. Some exchanges offer wallet services, allowing you to store your funds directly on the platform. However, not all exchanges or brokers automatically provide wallet services for you.
