Decipher the meaning of cryptocurrency in 200 words or less
1. What is cryptocurrency?
A cryptocurrency is a digital currency that is distributed by crypto owners on the internet. It exists on the basis of a consensus network – that is, many people agree that it has value.
This currency is not backed by any bank or government, which means it is not tied to a central authority. Without a central authority, crypto has no exchange rate, making it ideal for cross-border transactions. It also means that the crypto is not directly influenced by factors such as the economy and inflation.
2. How is crypto ownership verified?
Cryptocurrency ownership is documented using blockchain technology to create a digital account register. This means that the history of buying and selling cryptocurrency is encrypted and stored on multiple computers.
3. What gives cryptocurrency its value?
The value of cryptocurrency is relative. Like precious metals, cryptocurrency is considered valuable because it is rare. This is often one of the main arguments against cryptocurrency. However, in support of cryptography, ryan haareditor at NextAdvisor, asserts that “currencies have value because people think they have them, and companies or groups have decided that they are going to be used as a medium of exchange.”
What do you think of cryptocurrency? Let us know in the comments section below.
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Do you want to deepen your knowledge of crypto? Then be sure to read our article Flipping the NFT: Why Marketers Should Care.
*Image courtesy of Vector
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