Cryptocurrency

A cryptocurrency is a digital asset that uses cryptography and a blockchain to record ownership and transfer value, without depending on a bank or government to issue it or keep the books.

How it works

Ownership is represented by entries on a public ledger that the whole network agrees on through a consensus mechanism. You hold the private keys that authorise spending from your addresses, and transactions are verified by the network rather than by an intermediary. New units are typically issued through mining or staking according to fixed, transparent rules.

Why it matters

Cryptocurrencies make it possible to send value over the internet directly, around the clock, across borders, with the rules enforced by code. The trade-offs are price volatility, the personal responsibility of self-custody, and an evolving regulatory landscape.

Example

Bitcoin was the first cryptocurrency; thousands of others, collectively called altcoins, have followed with different designs and goals.

Cryptocurrency: Frequently Asked Questions

How is cryptocurrency different from regular money?

Regular money is issued and managed by banks and governments, while a cryptocurrency records ownership on a public blockchain that the whole network agrees on through a consensus mechanism. There is no central intermediary. You hold the private keys that authorise spending, and transactions are verified by the network rather than by a bank.

Where do new cryptocurrency units come from?

New units are typically issued through mining or staking, according to fixed, transparent rules written into the protocol. Rather than a central authority deciding how much to create, issuance follows a predefined schedule. This makes the supply and its growth predictable and publicly verifiable for anyone who checks the network's rules.

What are the main risks of using cryptocurrency?

The main trade-offs are price volatility, the personal responsibility of self-custody, and an evolving regulatory landscape. If you control your own keys and lose them, the funds are typically unrecoverable, with no bank to help. Prices can swing sharply, and rules differ by jurisdiction and continue to change.

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