Cryptocurrency | Secure Digital Currency

Cryptocurrency is a type of digital currency that is based on cryptography for chaining together digital signatures of token transfers, peer-to-peer networking and decentralization. Cryptocurrency uses cryptography for security, making it difficult to counterfeit. Public and private keys are often used to transfer the currency from one person to another. In some cases a proof-of-work scheme is used to create and manage the currency.


The underlying technical system upon which all cryptocurrencies are now based was created by the anonymous group or individual known as Satoshi Nakamoto for the purpose of creating an economy within which the practice of fractional reserve banking would be fundamentally impossible

The world now has a larger number of virtual currencies than a total 180 recognised currencies in different parts of the globe, notwithstanding issues like bankruptcies and growing regulatory unease about bitcoin and its other digital peers.

Within an ear shot of the 200-member mark, a total of 193 virtual currencies are currently being traded across the internet, although none of them carry an official stamp from the government or banking regulator from any of the countries.

A defining feature of a cryptocurrency is that it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation. The anonymous nature of cryptocurrency transactions makes them well-suited for a host of nefarious activities such as money laundering and tax evasion. The first cryptocurrency to capture the public imagination was Bitcoin, which was launched in 2009. Bitcoin's success has spawned a number of competing cryptocurrencies such as Litecoin, Namecoin and PPCoin.

Cryptocurrency is considered a counter-culture movement related to cypherpunks, who advocate the use of cryptography as a route to social and political change. Cryptocurrency presents a form of this movement in that it is essentially a fiat currency, which means it only has value if people agree to such and use it as a medium of exchange. However, because it is not tied to any country, its value cannot be affected by a central bank. In the case of Bitcoin, the most prominent functioning example of cryptocurrency, its value is determined by supply and demand in the market. As such, this currency behaves much like gold and other precious metals.

Cryptocurrencies make it easier to transfer funds between two parties in transactions; these transfers are facilitated through the use of public and private keys for security purposes. These fund transfers are done with minimal processing fees, enabling users to avoid the steep fees charged by most banks and financial institutions for wire transfers.

A major drawback of cryptocurrencies is that because they are virtual and do not have a central repository, a user’s digital cryptocurrency balance can be wiped out by a computer crash if a back-up copy of the holdings does not exist.

Since prices are based on supply and demand, the rate at which a cryptocurrency can be exchanged for another currency can fluctuate widely.

Some have expressed concern that cryptocurrencies are extremely risky due to their very high volatility and potential for pump and dump schemes.

Some cryptocurrency systems are pre-mined, have hidden launches, or have extreme rewards for the first miners. Pre-mining means currency is generated by the currency's founders prior to mining code being released to the public. It often refers to a deceptive practice, but can also be used as an inherent part of a digital cryptocurrency's design, as in the case of Ripple or Nxt.

Most cryptocurrencies are duplicates of existing cryptocurrencies with minor changes and no novel technical developments. One such, "Coinye West", a comedy cryptocurrency alluding to the rapper Kanye West, was served a cease-and-desist letter on January 7, 2014.

Very few cryptocurrencies can be exchanged for fiat currencies and instead can only be traded for other cryptocurrencies. Banks generally do not offer services for them and sometimes refuse to offer services to virtual-currency companies.

Regulators in several countries have warned against their use and some have taken concrete regulatory measures to dissuade users.