Cryptocurrency is a digital or virtual currency. Cryptocurrencies are used to buy goods and services online with at a discount to the prevailing price. Cryptocurrencies are using a blockchain, which is a decentralized technology spread over many computers that manages and records transactions.
Cryptocurrencies are typically created by a network of computers running software that creates and maintains a record of all transactions. This process of creating cryptocurrencies is called mining. All transactions can be tracked, and the records can be used for transactions between people or institutions outside the network.
Because of their decentralization, cryptocurrencies are generally designed to be tamper-proof, with the digital currency never being altered by a malicious actor. However, as they have grown more popular over the past year, it has been suggested that malicious actors within the system may be able to alter the records of other digital currencies.
Cryptocurrencies are not relatable to common currencies, because they are no legal tender.
Cryptocurrencies are used for services fees on the internet. Cryptocurrencies are not backed by any government and not backed by the currency the government is using.
In the last years the demand in cryptocurrencies have risen. The reason therefor is the possibility to trade them and gain profit. However, investing in cryptocurrencies comes with a risk, because of the high variation.
The most common cryptocurrencies are Bitcoin, Ethereum, Litecoin, Dogecoin, Cardano and Polkadot. Bitcoin is the well-known and also highest valued cryptocurrency with a value of 46. 715 BTC/USD (8.9.2021). Cryptocurrencies are held in wallets and can be exchanged using cryptography.