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Cryptocurrency
A cryptocurrency, crypto-currency,
or crypto is a digital currency designed
to work as a medium of exchange through a computer network that
is not reliant on any central authority, such as a government or bank, to uphold or
maintain it. It is a decentralized system for verifying that the parties
to a transaction have the money they claim to have, eliminating the need for
traditional intermediaries, such as banks, when funds are being transferred
between two entities.
Individual coin ownership records are stored in a digital ledger, a computerized database using strong cryptography to secure transaction records, control the creation of additional coins, and database using strong cryptography to secure transaction records,
to control the creation of additional coins, and to verify the transfer of coin
ownership. Despite their name, cryptocurrencies are not considered currencies in the traditional sense. And varying treatments have been applied to them, including classification as commodities, securities, and currencies currencies currencies in
the traditional sense and while varying treatments have been applied to them,
including classification as commodities, securities, as well as currencies,
cryptocurrencies are generally viewed as distinct asset class in practice. Some
crypto schemes use validators to maintain the cryptocurrency. In a proof-of-stake model,
owners put up their tokens as collateral. In return, they get authority over
the token in proportion to the amount they stake. Generally, these token
stakes get additional ownership in the token over time via network fees, newly
minted tokens, or other such reward mechanisms.
Cryptocurrency does not exist in physical form (like paper
money) and is typically not issued by a central authority. Cryptocurrencies
typically use decentralized control as opposed to
a central bank digital currency (CBDC). When
a cryptocurrency is minted or created before issuance or issued by a single
issuer, it is generally considered centralized. When implemented with
decentralized control, each cryptocurrency works through distributed ledger technology, typically
a blockchain,
that serves as a public financial transaction database. Traditional asset
classes like currencies, commodities, and stocks, as well as macroeconomic
factors, have modest exposures to cryptocurrency returns.
The first decentralized cryptocurrency was Bitcoin, which was first
released as open-source software in 2009. As of March 2022, more than 9,000 other cryptocurrencies were other cryptocurrencies in the
marketplace, of which more than 70 had a market capitalization exceeding $1
billion.
Digital
currency
Digital currency (digital money, electronic
money,, or electronic currency) is any currency, money, or money-like asset
that is primarily managed, stored, or exchanged on digital computer systems,
especially over the internet. Types of digital currencies include cryptocurrency, virtual
currency and central bank digital currency. Digital
currency may be recorded on a distributed database on the internet, a
centralized electronic computer database owned by a company or bank,
within digital files, or even on a stored-value
card.
Digital currencies exhibit properties similar to traditional
currencies, but generally do not have a classical physical form of fiat
currency historically that you can directly hold in your hand, like currencies
with printed banknotes or minted coins - however, they
do have a physical form in an unclassical sense coming from the computer to
computer and computer to human interactions and the information and processing
power of the servers that store and keep track of money. This unclassical
physical form allows nearly instantaneous transactions over the internet and
vastly lowers the cost associated with distributing notes and coins for example
of the types of money in the UK economy 3% are notes and coins, 79% as
electronic money (in the form of bank deposits). Usually not issued by a
governmental body, virtual currencies are not considered legal tender and
they enable ownership transfer across governmental borders.
This type of currency may be used to buy physical goods and services, but may also be restricted to
certain communities such as for use inside an
online game.
Digital money can either be centralized, where there is a
central point of control over the money supply (for instance, a bank), or decentralized,
where the control over the money supply is predetermined or agreed upon
democratically.