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What are cryptocurrencies?

Cryptocurrency is a form of digital currency intended for virtual transactions between individuals. Unlike physical coins or notes, cryptocurrencies solely exist as data. You can't physically possess a Bitcoin or store Ethereum in a safe.

Decentralized cryptocurrencies are generated collectively by the entire cryptocurrency network according to a predetermined rate set at the system's inception, which is publicly disclosed. This contrasts with centralized banking systems like the Federal Reserve, where currency supply is managed by entities such as governments or corporate boards through printing fiat money or making entries in digital banking records.

"Owning a Bitcoin signifies that every computer on the Bitcoin network collectively recognizes it as yours and, crucially, acknowledges that it was validly created by a miner."

A cryptocurrency, often referred to simply as crypto, is a digital asset designed to function as a medium of exchange. Ownership records of individual coins are stored in a ledger maintained by a computerized database, utilizing strong cryptography to secure transaction records, regulate the creation of new coins, and validate coin transfers. Unlike physical money such as paper currency, cryptocurrencies do not exist in tangible form and are not typically issued by a central authority.Cryptocurrencies generally operate under decentralized control rather than centralized digital currency or central banking systems. When a cryptocurrency is created and issued by a single entity before circulation, it is considered centralized. In contrast, decentralized cryptocurrencies employ distributed ledger technology, typically a blockchain, which acts as a transparent public database for financial transactions.