What are cryptocurrencies?
Cryptocurrencies are digital assets that use cryptographic encryption to ensure ownership and secure the integrity of transactions, and to control the creation of additional units, meaning preventing someone from making copies as we would, for example, with a photo. These coins do not exist in physical form: they are stored in a digital wallet.
A distinctive feature of cryptocurrencies is their decentralization.
This means that they are not regulated or backed by any central banking entity or government. Instead, they operate on distributed networks, where transactions are validated by multiple participants rather than a central authority. This decentralization is complemented by the intensive use of cryptography to ensure the security of transactions and protect user privacy. Cryptography ensures that payments are sent and received securely, and that ownership of the units is verified in an irrefutable manner.
In addition to their digital and decentralized nature, cryptocurrencies are distinguished by not being issued by central banks, credit institutions, or traditional electronic money entities. They are conceived as a digital representation of value that, on certain occasions, can be used as an alternative means of payment to conventional money.
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