cryptocurrency

cryptocurrency

(CRYPTOgraphic CURRENCY) A digital currency that resides in a decentralized network known as a "blockchain." Cryptocurrencies (cryptos) are not maintained or governed by any bank, financial institution or nation. Each one is a global entity, and Bitcoin was the first in 2009. In 2015, Ethereum debuted, the second major crypto.

Since then, thousands of other cryptos have been introduced with names such as Litecoin, Namecoin, Peercoin, Mastercoin, BlackCoin and Dogecoin. However, many are nothing more than scams that take advantage of the latest craze with the creators hoping to make a killing and depart. Some even clearly state they are just for fun! See blockchain, Bitcoin, Ethereum, Litecoin, Ripple, Dogecoin and Diem.

What's Cryptographic About It?
Two things. Cryptocurrencies use the public key cryptography system, which is made up of a private key and its public key counterpart. Parties send crypto using their private key and receive crypto using their public key. The public keys are visible to anyone interested but do not directly identify the parties in the transaction by name. See digital signature, public key cryptography and crypto tumbler.

Secondly, blockchain transactions are linked together using a cryptographic "hash" algorithm. This hash linkage prevents the transactions from being altered without detection. See cryptographic hash function.

How Are Cryptos Generated?
Major digital currencies such as Bitcoin and Ether (Ethereum's crypto) are automatically generated and added to the accounts of the "miners" that win the competition of adding new transactions to their respective blockchain. There are also cryptocurrencies being invented all the time that are funded with Bitcoin and Ether (see ICO and Ethereum token). See crypto mining and Bitcoin mining.

Based on Demand
Except for "stablecoins," which are backed by fiat currencies, the value of a crypto is based on market demand. The cryptocurrency exchanges function like stock exchanges. Once worth less than a penny, a single Bitcoin topped $60,000 in 10 years. See stablecoin, crypto craze, Bitcoin pizza and crypto glossary.

Real-Time Crypto Updates

For the latest cryptocurrency prices, go to www.CryptoCompare.com. The site tracks several thousand cryptos.

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