A cryptocurrency, crypto-currency, or crypto is a digital currency that functions as a medium of exchange via a computer network and 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 that uses strong cryptography to secure transaction records, control coin creation, and verify coin ownership transfers.
Despite their name, cryptocurrencies are not necessarily considered currencies in the traditional sense, and while various categorical treatments have been applied to them, such as classification as commodities, securities, and currencies, cryptocurrencies are generally viewed as a distinct asset class in practice. Validators are used by some crypto schemes to keep the cryptocurrency running. Owners put up their tokens as collateral in a proof-of-stake model. In exchange, they receive authority over the token in proportion to the amount staked. Token stakers typically gain additional ownership in the token over time through network fees, newly minted tokens, or other similar reward mechanisms.
Cryptocurrency does not exist in physical form (as paper money does) and is not typically issued by a central authority. In contrast to a central bank digital currency, cryptocurrencies typically use decentralized control (CBDC). A cryptocurrency is considered centralized when it is minted or created prior to issuance or when it is issued by a single issuer. When implemented with decentralized control, each cryptocurrency operates via distributed ledger technology, most commonly a blockchain, which serves as a public financial transaction database.
A cryptocurrency is a tradable digital asset or digital form of money that exists only online and is based on blockchain technology. Cryptocurrencies, as the name implies, use encryption to authenticate and protect transactions. There are over a thousand different cryptocurrencies in use today.
Bitcoin, the first decentralized cryptocurrency, was released as open-source software in 2009. Many other cryptocurrencies have been created since the release of bitcoin.