What is cryptocurrency?
Cryptocurrency is a digital or virtual currency that uses cryptography for security. This is decentralised, meaning it is not controlled by a central authority such as a bank or government. Cryptocurrencies are designed to be a secure and transparent alternative to traditional fiat currencies, and they can be used to facilitate transactions for goods and services.
The most well-known cryptocurrency is Bitcoin, but there are many others, such as Ethereum, Litecoin and XRP. Cryptocurrencies are created through a process called mining, in which powerful computers solve complex mathematical problems in order to validate transactions and add new units of the currency to the blockchain – a decentralised ledger that records all cryptocurrency transactions.
Cryptocurrencies are traded on online exchanges and stored in digital wallets, which are software programs that allow you to store, send and receive cryptocurrencies.
The value of cryptocurrencies is highly volatile and can fluctuate dramatically, making them a risky investment. However, they have also been used as a means of exchange and a store of value, and they have gained increasing mainstream acceptance in recent years.