What is a cryptocurrency
Cryptocurrencies, also called cryptocurrencies or cryptoassets, are a digital medium of exchange. It fulfills the function of a currency, and hence they are known by that name. However, it is something completely digital, using cryptographic methods to secure your financial transactions, control the creation of new units and verify the transfer of assets.
Therefore, we can consider them as a decentralized alternative to digital currencies . By the term "decentralized" we mean that these currencies are not controlled by a single service or company. The same thing happens with conventional currencies, centralized and organized by entities and banks, so they are an opposite method to both.
Cryptocurrency Features
There are several unique characteristics of cryptocurrencies that make them extremely interesting and useful in multiple use cases:
They use cryptography: it is a method that allows creating an encrypted code to hide information. In relation to cryptocurrencies, cryptography applies two main elements: hash functions (which verify the integrity of the data and encode the transaction information in a unidirectional way) and digital signatures (which allow transactions to be signed by encrypting the information, thus that none of this information be revealed).
They use blockchain technology: As already mentioned, blockchain is a public ledger that makes it easy to track transactions. This technology creates a secure record, which cannot be altered without the agreement of the majority of the rest of the network, making it more secure than any other traditional accounting record. As more and more millions of people use them, the system becomes more and more secure.
They use block mining: Mining cryptocurrencies consists of assigning new transaction records to the blockchain in the form of blocks. In this process, new cryptocurrencies are produced that are added to the total of them in circulation.
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