Cryptocurrency is a digital or virtual form of currency that uses cryptography for security and operates on a decentralized system using blockchain technology. Blockchain serves as a distributed ledger that records all transactions across a network of computers, eliminating the need for a centralized authority such as a bank or government. The first and most well-known cryptocurrency, Bitcoin, introduced in 2009 by an anonymous entity known as Satoshi Nakamoto, pioneered the use of blockchain and the proof-of-work consensus mechanism.
This decentralized nature of cryptocurrencies allows for secure, transparent, and tamper-resistant transactions. Cryptocurrencies can function both as a store of value and a medium of exchange for goods and services. The industry has grown to include thousands of different cryptocurrencies with various features and specifications. Some follow Bitcoin’s model of decentralized, proof-of-work systems, like Bitcoin Cash and Litecoin, while others use alternative consensus mechanisms like proof-of-stake, seen in cryptocurrencies like Tron and Tezos.
The cryptographic foundation of these currencies ensures the integrity of transactions and the prevention of issues like double-spending. Cryptocurrencies have gained significant recognition for their potential to revolutionize financial systems by providing a digital, borderless medium of exchange independent of traditional banking infrastructures.