Described in the simplest way CryptoCurrency are digital assets stored on computer databases around the world.
A Cryptocurrency is an online version of money, a digital asset to be precise. The name is derived from the Cryptography, which is used to encrypt transactions and control the production of the currency. It is a strictly monitored process, as it uses the Blockchain Technology.
Anyone can purchase these digital assets, and as a result, their price goes up when more people buy, and down as more people sell, just as the exchange rate constantly changes for your own country’s currency as traders buy and sell it.
But unlike the money in your pocket or bank account, cryptocurrencies are not issued or controlled by any sovereign state or central bank- they’re ruled by plain, logical computer code. Hence called Decentralized currency.
Why are cryptocurrencies important?
Bitcoin was originally created in 2009 as a currency free from any central bank authority. At the time the world’s central banks were hell-bent on printing money to inflate the world out of a debt bubble- and the inflation money printing brings is bad news for anyone who wants their money to retain its spending power.
As Bitcoin’s popularity has grown, many other coins have been created, most sharing the same set of attributes-
Each and every transaction of a cryptocurrency is recorded in a single file, called a blockchain, of which copies are stored across thousands of servers around the world, creating a robust, decentralized system.
Almost every cryptocurrency presents its code for the world to see (called open source). Anyone so minded can audit the code themselves to be sure nothing nefarious is going on. Open source code provides trust in the system- people can be corrupted, but code obeys logic.
Security & transparency combine to make it all-but-impossible for someone to change the transaction history of a cryptocurrency, as each coins movement has been stored in thousands of identical blockchain files across the world.
All that’s required to send and receive cryptocurrencies, anywhere in the world, is a device capable of accessing the internet.
Bank transfers take days. Cryptocurrency transfers can be instantaneous, or take up to an hour, depending on the currency used.
Sending cryptocurrencies across countries and borders requires no conversion fee.
All of these characteristics combine to give crypto impressive benefits over fiat currency- you don’t have to trust any third parties with your money, its movement is cheap, quick and recorded on an incorruptible ledger for anyone to see and confirm themselves.