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What is cryptocurrency

A cryptocurrency is a digital currency that uses cryptography and blockchain technology to secure transactions and control the creation of new units. Unlike tokens, a cryptocurrency typically has its own blockchain network.

Unlike traditional currencies, cryptocurrencies are usually not controlled by central banks or governments.

How cryptocurrencies work​

Cryptocurrencies operate on a blockchain — a distributed network of computers that stores and verifies all transactions.

New cryptocurrency coins are created when new blocks are added to the blockchain. This process depends on the consensus mechanism used by the network.

Miners or validators who maintain the network receive rewards in the form of cryptocurrency. In addition, users must pay transaction fees in the same cryptocurrency when sending funds. These fees are also distributed to miners or validators as compensation for securing the network.

Most well-known cryptocurrencies​

  • Bitcoin
  • Litecoin
  • Ethereum
  • Solana
  • Tron

What cryptocurrencies are used for​

Cryptocurrencies are commonly used for:

  • international payments and money transfers
  • investment and trading
  • paying for goods and services
  • decentralized finance (DeFi) applications

FAQ​

How is cryptocurrency different from traditional money?​

Cryptocurrencies operate on blockchain networks and do not require banks or centralized intermediaries to process transactions.

Can anyone create their own cryptocurrency?​

Yes, but creating a cryptocurrency requires building and maintaining a blockchain network. Because of this, creating a token on an existing blockchain is usually much easier.

How is cryptocurrency created?​

New coins are generated when new blocks are produced in the blockchain. The participant who creates the new block receives the cryptocurrency reward.