Cryptocurrency

Definition - What does Cryptocurrency mean?

Cryptocurrency is a type of digital currency that is based on cryptography. 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.

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.

Techopedia explains Cryptocurrency

Gavin Andresen, the technical lead at Bitcoin, told Forbes.com that cryptocurrency is an attempt to bring back a decentralized "currency of the people," one that is not subject to inflationary moves by a central bank. Bitcoins must be cryptographically signed each time they are transferred. This means that each Bitcoin user has both a public key and an individual private key.

Because cryptocurrency transactions are anonymous and virtually untraceable, they have created a niche market for illegal transactions such as in illegal drugs. Because there is no central repository for the currency, neither law enforcement nor payment processors have jurisdiction to freeze users’ accounts. However, for supporters of cryptocurrency, this anonymity is one of the technology’s main strengths, despite its abuse for illicit purposes, because it allows for a power shift from institutions to individuals.
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