Cryptocurrency Explained in Less Than One Minute
The definition of cryptocurrency from two perspectives: novice and expert
In the past decade or so, and until now, we are experiencing a trending aspect of cashless economies — cryptocurrencies. Cryptocurrencies are almost a new technology, and to some people, they can be daunting. But is that the case? Well, let us find out!
Firstly, what is a cryptocurrency?
In simple terms, a cryptocurrency is a form of digital cash.
Like fiat currencies, you can use a cryptocurrency to buy groceries at a shop, leave a tip at a restaurant, order sneakers from an eCommerce store, and book flights or hotels. You can also send it to friends and family anywhere in the world, pay salaries, buy company shares, and make donations.
Technically, a cryptocurrency is a digital asset designed to function as a medium of exchange. Ownership of the asset is recorded in a ledger (computerized database) using cryptography to secure transaction records, control the creation of additional pieces, and verify the transfer of ownership.
You may think that cryptocurrencies operate like traditional online payment providers (Paypal, Alipay, or Payoneer). The thing is, payment platforms belong to organizations that hold your money on your behalf until you ask them to transfer it when you want to spend it. Whereas with cryptocurrencies, there is no central authority. Everyone with ownership can act as a bank running free software. Meaning, you, your friends, and many others can interact directly — no third party required!
So why do they call it cryptocurrency?
The name cryptocurrency is a combination of cryptography and currency. With cryptography, advanced Maths is used to secure peoples’ funds, ensuring that only they can spend it.
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