Cryptocurrency is a type of digital or virtual currency that uses cryptography for security. Unlike traditional currencies, cryptocurrencies operate on decentralized networks based on blockchain technology, which is a distributed ledger enforced by a network of computers (nodes). This decentralization makes cryptocurrencies resistant to government control or manipulation.
Cryptocurrencies can be transferred directly between parties without the need for intermediaries, such as banks, enabling peer-to-peer transactions. Each transaction is recorded on the blockchain, ensuring transparency and immutability. Bitcoin, created in 2009, is the first and most well-known cryptocurrency, but thousands of other cryptocurrencies, such as Ethereum, Litecoin, and Ripple, exist.
Cryptocurrencies can serve various purposes, including as a medium of exchange, a store of value, or for specific applications within blockchain ecosystems, such as smart contracts or decentralized finance (DeFi). The value of cryptocurrencies can be highly volatile, with prices influenced by factors such as market demand, utility, regulation, and technological advancements. Overall, cryptocurrencies represent a novel approach to financial transactions and have the potential to disrupt traditional financial systems.
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