What is cryptocurrency? A cryptocurrency is a digital currency, which is an alternative form of payment created using encryption algorithms. The use of encryption technologies means that cryptocurrencies function both as a currency and as a virtual accounting system.
Mining is the term used to describe the process of creating cryptocurrency. Crypto transactions need to be validated, and mining performs the validation and creates new cryptocurrency. Mining uses specialized hardware and software to add transactions to the blockchain.
Not all cryptocurrency comes from mining. For example, crypto that you can’t spend isn't mined. Instead, developers create the new currency through a hard fork. A hard fork creates a new chain in the blockchain. One fork follows the new path, and the other follows the old. Crypto you can’t mine is typically used for investments rather than purchases.
Cryptocurrency is available as coins or tokens. The difference between them is that tokens are assets that exist on a blockchain, while coins can be virtual, digital, or tangible. Coins are more like traditional money; a digital coin has its own blockchain. Conversely, a token is created on an existing blockchain and can be used as currency or to represent asset ownership.
The first cryptocurrency introduced was Bitcoin, the most commonly traded one. Ethereum is the second most valuable cryptocurrency and can be used for complex transactions. Other more common cryptocurrencies, called altcoins, include Cardano, Solana, Dogecoin, and XRP.
Cryptocurrency, or crypto, is a digital payment platform. Although people mainly use it for online transactions, you can sometimes use it to purchase physical assets. Unlike traditional payment methods that are regulated by central banks and the government, cryptocurrency is decentralized, meaning it's controlled by several authorities, such as the organizations that create it, instead of one.
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