Chapter 2

Cryptocurrency

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What is Cryptocurrency?

Cryptocurrency is basically internet currency, or a medium of exchange online.

To be honest, we’ve never been super fond of the name cryptocurrency, as it implies “cryptic” or “encrypted”, one of which feels negative, and the other secretive. Cryptocurrency is simply digital money that can be exchanged for goods and services.

The name was given to a broad group of digital assets that started in 2009 with Bitcoin. There are thousands of different cryptocurrencies, but only a handful have any appreciable size and potential future.

How does it work?

What makes cryptocurrencies interesting is the use of a technology called blockchain, or a decentralized public ledger that is maintained by a network of computers that manages and records transactions.

These computers have two main functions: One is to process transactions, the other is to maintain the database that records and stores those transactions. Transactions are batched into “blocks,” which are then connected in chronological order in a long, unbroken “chain.” This is why the software became called blockchain.

Once recorded, the data cannot be altered, otherwise known as immutable. This makes it very difficult (or even impossible) to hack. The security of blockchain is one of the main appeals of this technology.

Confusing terminology aside, the primary reason it matters is this: Cryptocurrency allows any two people, anywhere in the world with an internet connection, to make a transfer of value in a few minutes without any middleman. That’s pretty cool.

Examples of Cryptocurrency

There are many examples of cryptocurrencies, with more coming out all the time. The most popular ones are Bitcoin, Ethereum, XRP, Tether, Cardano, Polkadot, Stellar, USD Coin, Dogecoin, and Chainlink.

Summary

In conclusion, cryptocurrency is a form of currency online that you can use in exchange for goods and services. What makes it different is the underlying blockchain technology.