#TradingMistakes101 Cryptocurrency is a type of digital currency, the accounting of internal accounting units of which is ensured by a decentralized payment system (there is no internal or external administrator or any equivalent)[1][2], operating in a fully automatic mode. Cryptocurrency itself does not have any special material or electronic form—it's just a number that denotes the amount of data accounting units, which is recorded in the corresponding position of the information packet of the data transmission protocol and often is not even encrypted, just like all other information about transactions between addresses in the system.
Allegorical representation of cryptocurrency (in the center is the symbol of the most famous cryptocurrency, Bitcoin)
The term cryptocurrency became established after the publication of the article on the Bitcoin system ‘Crypto currency’ (Cryptographic currency), published in 2011 in Forbes magazine[3]. At the same time, both the creator of Bitcoin and many other authors used the term ‘electronic cash.’
Cryptographic methods are involved in the mechanisms of address generation and verification of authorizations for operations with it (digital signature based on a public key system, the order is available exclusively to the holder of the corresponding secret key for that address), as well as the formation of a transaction packet and its interrelation with other packets (sequential hashing that makes it impossible to change information about the amount of cryptocurrency)[2][4][5][6]. At the same time, the system does not have any information about the owners of addresses or the fact of address creation (an address can be generated completely autonomously, even without connecting to the network and without reporting anything to the network subsequently)—that is, there is no mechanism to verify that the recipient's address actually exists or that the access key to it has not been lost. The absence of direct information about the owner is the basis (but not limited to this) of the anonymity of transaction participants. In terms of economic conditions and consequences, cryptocurrency payments are more similar to cash payments than to cashless payment options, although cryptocurrencies are primarily developed for remote purchases (for example, via the Internet).
