What is cryptocurrency?
Answer
Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates on a decentralized network (typically a blockchain), without relying on a central authority like a government or bank. Key characteristics: (1) Decentralized — no central issuer or controller; (2) Cryptographically secured — public/private key cryptography ensures only the rightful owner can spend funds; (3) Transparent — all transactions are recorded on a public blockchain; (4) Pseudonymous — addresses are public but not directly tied to real identities; (5) Borderless — can be sent anywhere in the world without intermediaries. Examples: Bitcoin (BTC) — the first cryptocurrency, digital gold, store of value; Ethereum (ETH) — programmable blockchain with smart contracts; stablecoins (USDC, USDT) — pegged to fiat currencies for stability. Cryptocurrencies serve as: medium of exchange, store of value, and utility tokens for accessing blockchain services.