Cryptocurrency is a peer-to-peer payment system, that exists solely as entries to an online database. It does not require banks to verify transactions and, essentially, replaces 'real' money whereby anyone, anywhere, can send and receive payments digitally. The transactions are recorded in a public ledger and stored in digital 'wallets'. The wallets can take the form of 'hot', which are online software based and 'cold', which are offline hardware based.
Cryptocurrency is so called because it uses 'encryption' to verify transactions. The complex coding generated by the encryption is used to store and send data between wallets and to public ledgers. Accordingly, it is generally considered a secure system and the 'private key' generated forms the basis of a person's holding, allowing them to transfer directly to another person, without the use of a third party.
The process used to generate cryptocurrency is called 'mining', which uses significant computational power and specialised hardware. The amount of electrical energy consumed, and the e-waste generated worldwide, is comparable to that of Greece and the Netherlands, respectively.
First appearing in 2009, the first form of cryptocurrency was the well known 'Bitcoin' and there have been hundreds of entries since, including Ethereum, Litecoin and Ripple. The entries following 'Bitcoin' are known as 'altcoins' to differentiate them.
Although principally intended to be a currency for the purchase of goods and services, it has not, so far achieved this to the expected extent, however, is growing in this capacity and is now accepted by many e-commerce sites, particularly those that sell tech products.
What cryptocurrency has been most famous for, so far, is it's trading and investment potential whereby there are now many exchanges and online brokers in existence. When choosing an investment platform it is important to explore the facilities available, including storage.
Warning! Cryptocurrency can be highly volatile, therefore some experience, or expert advice is required before investing.