What is a Cryptocurrency

Cryptocurrency is a combination of two words – crypto and currency. Cryptocurrency is another name of digital currency or virtual currency. A cryptocurrency is a digital asset that is secure using a cryptography algorithm. It can be transferred from one digital device to another by using a unique address.

According to Jan Lansky, a cryptocurrency is a system that meets six conditions:

  • The system does not require a central authority, distributed achieve consensus on its state [sic].
  • The system keeps an overview of cryptocurrency units and their ownership.
  • The system defines whether new cryptocurrency units can be created. If new cryptocurrency units can be created, the system defines the circumstances of their origin and how to determine the ownership of these new units.
  • Ownership of cryptocurrency units can be proved exclusively cryptographically.
  • The system allows transactions to be performed in which ownership of the cryptographic units is changed. A transaction statement can only be issued by an entity proving the current ownership of these units.
  • If two different instructions for changing the ownership of the same cryptographic units are simultaneously entered, the system performs at most one of them.

Bitcoin was the first virtual currency. Other popular cryptocurrencies are Ethereum, Bitcoin Cash, Ripple, EOS, Litecoin, and IOTA. Today, there are several thousands of cryptocurrencies in market that can also be traded via various digital exchanges.