Cryptocurrencies are digital peer-to-peer payment systems that do not rely on an authority to record transactions.
"Crypto" comes from the Greek word "kryptós," meaning hidden or secret - it refers to the use of cryptography used in cryptocurrencies to secure its network. They allow anyone, anywhere, to make and receive payments with very little barriers to entry.
Instead of physical money like cash, cryptocurrencies are purely digital. Every transaction involving a cryptocurrency is recorded on a shared ledger called a blockchain.Each time there is a valid transaction, the ledger is updated.. Cryptocurrencies are stored in digital wallets.
Cryptocurrencies have flipped conventional ideas about levels of trust needed to exchange value by creating networks where the programme, rather than a bank for example, becomes the arbitrator and validator of transactions. Networks can offer incentives or rewards to those who use resources to validate everyone's transactions and keep them secure.
One of the key features of cryptocurrencies is their decentralised nature. This has the advantage of potentially reducing fees, eliminating the need for intermediaries, and providing transparency and security. However, it also brings challenges like regulatory concerns, price volatility and security concerns.
Bitcoin was the first cryptocurrency to gain widespread attention and propelled the creation of a new asset class and industry. There are now thousands of cryptocurrencies, each with unique designs and uses. Much of the interest in cryptocurrencies is speculative investing. However, the technology and integration of cryptocurrencies are becoming more mainstream and are finding their way into more industries.