A cryptocurrency is a digital or virtual money variant that uses encryption to ensure the confidentiality of transactions and limit the generation of new units. Cryptocurrencies are not like government-issued fiat currencies, as they are entirely reliant on decentralized blockchain networks rather than power and control centralized by a single entity. This system takes away the banking system and intermediaries, thus allowing people to directly transact with each other.
A blockchain is used to keep track of every cryptocurrency transaction, and it works in the same way as a public ledger where anyone is allowed to take a peek at it. As a result, all fund movement is transparent, but at the same time, it is also guaranteed that the funds cannot be changed or erased once they are confirmed due to the immutability of the system.
Bitcoin is the most popular cryptocurrency. It was launched in 2009 and claimed to be the first-ever decentralized digital currency. The digital currency realm has since expanded to thousands of other coins, including Ethereum, which has innovated with non-cash smart contracts.
There are many reasons why people prefer using cryptocurrencies including online payments, sending money internationally, trading, participating in decentralized finance (DeFi), and even acquiring digital art called NFTs, among others. There might be times when the prices are extremely unstable, but the innovation of cryptocurrency technology keeps going on and has started the process of changing the ways of money transfer, ownership, and most of all the financial systems in the digital world.
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