Cryptocurrency is a digital form of money that is traded electronically. They are created through a technology known as a blockchain and are stored and traded via decentralized platforms; this allows them to trade freely outside of government rules and regulations. This is one of their main attractions as they are more resilient to inflation and not subject to boom and bust economic cycles.
The first and most common cryptocurrency is called Bitcoin. A pseudonymous person called, Satoshi Nakamoto, created it in 2009. Since then, there have been thousands of different cryptocurrencies created, some using similar blockchain technology and others completely new. Cryptocurrencies are most commonly used as a payment method for a performed service or money-transfer, but they are also widely used in the purchasing of tangible goods.
The key advantage of cryptocurrencies in comparison to existing fiat currencies and digital assets is the fact that transactions are direct from buyer to the seller(peer-to-peer); there is no need for a trusted third party to verify and clear the transaction. Instead, transactions are verified by using cryptographic codes known as public and private keys –these essentially act as passwords to ensure a transaction’s authenticity.
•Cryptocurrenciesare self-autonomous and not controlled by a centralised government
•In comparison to everyday fiat currency transactions, cryptocurrencies tend not to be privy to any direct transaction fees.
•Cryptocurrency transactions are peer-peer and do not rely on an intermediary third party to be processed and executed.
•As they are digital, there are security risks due to hacking and technical errors.
•Some examples of cryptocurrencies currently circling the market are: Bitcoin, Ethereum and Dogecoin.