What is Cryptocurrency in Simple Words

What is Cryptocurrency ?

Cryptocurrency is a digital or virtual currency that can be used online in exchange for goods and services.  

 In other words you can use cryptocurrencies like other currencies to buy or sell things, unlike other currencies it is not physical but digital or virtual.

In simple words "Cryptocurrency is a new form of digital money".

Cryptocurrency uses cryptography to provide secure online transactions, that's why it is called cryptocurrency.

Cryptography is a technology that keeps information safe and hidden from the attackers.

Cryptocurrency uses blockchain technology which is decentralized, secure and spread across many computers, that manage and record the transactions of cryptocurrencies.

Blockchain is a decentralized and distributed databases system. it is a new way to share data and make transactions more secure, transparent and cheaper than before.

So now you know what is cryptocurrency, it is a new form of digital money. It uses cryptography and blockchain technology. but you might still have this question in mind that what exactly is  money? So let's briefly discuss about it. 

What is Money?

Before the existence of money, there was  system of exchange  called Barter System.

Barter System 

Barter System is the exchange of goods or services for other goods or services without using money.
For example: If you had apples and wanted to buy oranges. you will had to find someone who had oranges and wanted to exchange it for the apples. You both agreed on how many apples  will be exchanged for how many oranges, and the trade is done between you two. The same will go for services to services and services to goods. Barter System was not efficient, there were many many problems and issues so they come with solution which is called metal coins. 

Metal Coins 

 
Metal objects were introduced and used as money or form of exchanged. Those coins mostly made of mixture of silver and gold. It had different sizes and different stamps which represented its values.
metal was better option to use because of its availability, easy to work with, and could  be recycled easily. but still it was not the final solution, as the time passed,  they come with another one.

Gold Backed Paper Currency

It was in the form of paper notes and was backed by government or bank's  promised to exchange it for a certain amount of silver or gold. It was also called representative money.

For example: If you had $100 note, the government or the bank would be responsible to gave you the same amount of gold whenever you want it in the return of your note. Thy had to keep the same amount of gold ready for you in case you want it back. your paper currency was just representing the gold you won with government or bank.  

Fiat Money

Gold backed paper currency has now been replaced by fiat money. It has no more backed by the gold or silver but only by the government you trust. It is in the form of notes and coins and its worked so perfectly for entries, but then the world changed with invention and usage of internet on daily basis. we are now living in digital time and in a digital world, and we need digitized currency too. so they come with solution called digital money or digital currency.

Digital Currency

Digital Currency or Digital Money only available in digital or electronic form. it does not has any physical from. For example: your credit card, debit card or your online banking system only transfer digital data from one account to another. There is no physically transfer of money happening. its only the numbers decreasing in one account and increasing in another. It is also called electronic money, electronic currency, or cyber cash.

Cryptocurrency

Cryptocurrency comes in the category of digital currency but it is very very different from normal digital currency.  lets see in a very detailed way the difference between cryptocurrency and the normal currency.

Difference Between Regular currency and Cryptocurrency

How is cryptocurrency different from regular currency?  let's answer that age old question and see what makes them so different from one another. 

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