What Is Cryptocurrency?

Cryptocurrency

A cryptocurrency is a virtual currency created using cryptography functions and stored on blockchain networks using distributed ledger technology. Cryptocurrency is decentralized, not owned or governed by any centralized entity or government. It is a universal digital currency that is widely used globally without any location barriers.

The benefits of cryptocurrencies include more affordability and prompt money transfers. Decentralized systems do not collapse at a single point of failure. Drawbacks of cryptocurrencies include their price volatility and elevated power consumption for mining actions. 

Comprehending Cryptocurrency

Cryptocurrencies are digital currencies created by cryptographic systems.

Crypto is created to facilitate complete control of assets to the user and eradicate third-party involvement like Banks.

Cryptocurrency is created using multiple methods like encryption algorithms, cryptographic techniques like elliptical curve encryption,public-private key pairs, and hash functions.

Blockchain is a decentralized network of computers interconnected to one another as blocks. They work based on distributed ledger technology. Blocks on the blockchain are created using hash functions and interconnected with preceding and successive blocks. Each block holds transactions that are verified separately by each validator on a network. While adding a new block it must be verified by all the parties involved in the transactions over the network and once added blocks on the network are immutable.  

Blockchain distributed ledger technology that facilitates decentralized, immutable, and transparent. They can be used for a broad range of industries like supply chain, Online Voting, and crowdfunding. 

Types of Cryptocurrency

Cryptocurrency is built over various blockchain networks such as Bitcoin, Litecoin, Altcoins, etc.  Cryptocurrencies are associated with blockchain networks like Ether on Ethereum, BNB on BinanceSmartChain, and Tron on Tron network.

Types of cryptocurrencies depend on the purpose of the cryptos. Coin names differ from coin types. Token types with names of tokens in that category:

Utility

Utility tokens serve specific purposes on their respective blockchains like ETH, XRP, & BNB

Transactional

Transactional tokens are created for payment purposes.

Ex Bitcoin

Governance

Governance tokens denote voting or additional rights on a blockchain, such as Uniswap.

Platform

Platform tokens support applications created to use a blockchain, such as Solana.

Security

Security Tokens denote the ownership of an asset, such as a reserve that has been tokenized (value transferred to the blockchain). MS Token is an example of a securitized token, that gains partial ownership of the Millennium Sapphire.

Buy / Sell Cryptocurrency

Cryptocurrency can be bought and sold through a cryptocurrency exchange. Crypto exchange are dedicated platform for buying and selling various types of cryptocurrencies on current live market price among the crypto investors. Cryptocurrency is stored on the cryptocurrency wallet assigned by the crypto exchange. 

One can buy cryptocurrency as an investment or through a brokerage or crypto exchange like Binance, Coinbase, Robinhood, etc.