What Is Cryptocurrency?

A cryptocurrency is a digital currency designed to work through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it.

Individual coin ownership records are stored in a digital ledger, which is a computerized database using strong cryptography to secure transaction records, control the creation of additional coins, and verify the transfer of coin ownership.

Despite the term that has come to describe many of the fungible blockchain tokens that have been created, cryptocurrencies are not considered to be currencies in the traditional sense, and varying legal treatments have been applied to them in various jurisdictions, including classification as commodities, securities, and currencies.

Cryptocurrencies are generally viewed as a distinct asset class in practice. Some crypto schemes use validators to maintain the cryptocurrency.

The first cryptocurrency was bitcoin, which was first released as open-source software in 2009. As of June 2023, there were more than 25,000 other cryptocurrencies in the marketplace, of which more than 40 had a market capitalization exceeding $1 billion.

Crypto’s Wallets

A cryptocurrency wallet is a means of storing the public and private “keys” (address) or seed, which can be used to receive or spend the cryptocurrency. With the private key, it is possible to write in the public ledger, effectively spending the associated cryptocurrency.

With the public key, it is possible for others to send currency to the wallet.

There exist multiple methods of storing keys or seed in a wallet. These methods range from using paper wallets, to using hardware wallets, to a digital wallet, to hosting your wallet using an exchange where cryptocurrency is traded, or by storing your wallet information on a digital medium such as plaintext.