What are cryptocurrencies?

Updated: Mar 11, 2020

Learn more about what cryptocurrencies are and how they work.

You may have heard of cryptocurrencies before and probably have some questions about what it is and how it works.

Cryptocurrencies are digital representations of money rather than traditional physical currencies. Unlike traditional currencies, cryptocurrencies are not issued or controlled by a central authority. This makes them decentralized, since cryptocurrency transactions are executed and managed by blockchain technology to perform the same functions that a central bank would normally do, such as issuing new amounts of cryptocurrency (i.e., mining new ones currencies) and verify transactions; the decentralization benefits the lack of trust, security, immutability, the no permission, speed, without borders and anonymity.

Cryptocurrencies are divided into two types: coins and tokens. Currencies are cryptocurrencies that can operate independently and have their own platform or blockchain. Examples of currencies are Bitcoin, Etheruem, Litecoin, Ripple, Stellar and Doge. Tokens are cryptocurrencies that aggregate a specific function or right of ownership. As an example, Binance Coin is designed to be used to pay discounted rates. Cryptocurrencies, whether currencies or tokens, are bought, transferred and kept in cryptocurrency wallets.

The CoinMarketCap article is part of a guide that brings solid understanding of the fascinating world of cryptocurrencies. The article integrates a series of educational content that we will indicate to encourage you to continue learning and reading about this topic.

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