Cryptocurrency in Plain Words
Cryptocurrency is a digital payment system that does not involve banks in checking transactions. It is a peer-to-peer system that allows any user, anywhere, to send and receive payments. Cryptocurrency payments exist solely in digital form in an online database describing specific transactions. They do not involve transactions with physical money with real-world circulation and exchange possibilities. When funds are transferred in cryptocurrency, the transactions are recorded in a public registry. Cryptocurrency is stored in digital wallets.
Peculiarities of cryptocurrency
- Decentralization and lack of control. Transaction information in blockchain is stored on a huge number of servers around the world. It is equally available to all participants.
- Anonymity. Despite the openness of information about transactions, users see only each other’s wallet numbers (analog of an account number in a bank). The owner of a wallet remains unknown.
- Transaction irreversibility. Recording a transaction in a block leads to a change in the whole chain. That’s why you can’t undo a crypto transaction.
- Absence of physical form. All those images with crypto coins are nothing more than symbolism. This means that cryptocurrency is a computer code, it cannot be touched or put in your pocket. And a cryptocurrency wallet is a storage of information online or on your device — that is, it has nothing in common with the usual, tangible wallet.
