A cryptocurrency is a digital or virtual currency that uses cryptography for security. It is difficult to counterfeit a cryptocurrency because of this security feature.
Many cryptocurrencies are decentralized systems based on blockchain technology. A defining characteristic of a cryptocurrency, and arguably its greatest appeal, is its organic nature; it is not issued by any central authority, making it theoretically immune to government interference or manipulation.
The first blockchain-based cryptocurrency was Bitcoin, which is still the most popular and valuable. Today, there are thousands of alternative cryptocurrencies with various features or specifications, but Bitcoin's dominance reaches nearly 70%.
Launched in 2009 by an individual or group known by the pseudonym Satoshi Nakamoto, Bitcoin has spawned a number of competing cryptocurrencies, known as Altcoins, such as Litecoin, Qtum, Ethereum and Cardano.
Many experts see blockchain as having important uses in technologies such as online voting and crowdfunding, and large financial institutions such as JPMorgan Chase see cryptocurrencies as a way to reduce transaction costs by making payment processing more efficient.
However, because cryptocurrencies are virtual and have no central repository, your cryptocurrency wallet can be lost if you simply lose your private keys.
At the same time, no central authority, government or company has access to your funds or personal information. Also, some cryptocurrencies are more private than others. Bitcoin, for example, is a relatively poor choice for doing illegal business online, it would be better to use Dash, ZCash or Monero, which are much harder to trace. Therefore, cryptocurrencies are considered by some economists as a passing fad or a speculative bubble.
The blockchain of cryptocurrencies are secure, but users are safe from the threat of hacking. A 51% attack can be performed on some blockchain and exchange platforms can be attacked.
Yet, many observers see cryptocurrencies as the hope that a currency that preserves value can exist. It facilitates exchange, because it is more transportable than hard metals and is immune to the influence of central banks and governments.
