Cryptocurrency is formed from two words - “crypto” (data encryption) and “currency” (medium of exchange). Thus, a cryptocurrency is a medium of exchange (like ordinary money) that exists in the digital world and uses encryption that ensures the security of transactions. Cryptocurrency is an alternative form of payment in cash and credit cards.

In simple terms, cryptocurrency is a type of digital or virtual money. It serves as ordinary money, such as dollars, pounds, euros, yen, etc. But it has no physical counterparts — banknotes or coins that can be carried around, that is, the cryptocurrency exists only in electronic form.

How is cryptocurrency different from digital currency?

Below is a list of the main distinguishing features of cryptocurrencies from digital currencies and fiat money:

1. Decentralization. As in the traditional banking system, most digital currencies are regulated by regulatory agencies, such as the Central Bank and other government agencies. This means that all currency exchange transactions are controlled, and their exchange rate is determined by these regulatory bodies.

On the other hand, cryptocurrencies are completely decentralized. This means that no state can control them. The rules are established by the cryptocurrency community.

2. Anonymity. With digital currencies, it’s almost impossible to hide account holder information. To use electronic wallets like PayPal, you need to provide personal information such as your name and address.

On the other hand, you do not have to disclose any personal information when you open a wallet for trading cryptocurrency. Coins such as Dash are used to ensure complete anonymity.

3. Transparency. The digital currency structure allows only government organizations to access information about transactions.

On the other hand, cryptocurrency transactions are publicly available. You cannot find out who is behind a specific account, but you can track transactions and monitor the amount of money in the system.

4. Transactions. Because transactions are monitored by central authorities when using digital currency, they can easily mark transactions as suspicious, or even block an account.

On the other hand, once the cryptocurrency transaction is completed, it is automatically added to the blockchain and becomes irreversible forever. No one can block your wallet and transfer your funds to another account. Since the exchange of cryptocurrencies is carried out without intermediaries, the transactions have high speed and low commissions.

5. Security. When you open the cryptograph, you get a private key, which is impossible to crack if you keep it in a safe place. But do not lose it, because without it you will not be able to enter your wallet, and you will not be able to restore it.

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