Cryptocurrency is a digital or virtual currency that uses encryption to verify transactions. It’s not backed by any central bank or government, and it operates outside most existing financial infrastructure. This decentralized structure makes it hard for governments and banks to manipulate or control.
People use cryptocurrency to buy things online and at some physical stores. It’s also a popular way to invest in new businesses and projects. A growing number of apps let you pay with crypto, and many major brands like Microsoft accept it as payment.
Some people earn crypto by “mining,” which involves using special computer equipment to solve complex math problems. Others buy it from an exchange, app, website, or at a crypto ATM. Crypto transfers are usually instant, and they cost far less than wire transfers or money orders. International transactions are also faster, and they don’t require any documentation or fees.
Many cryptos are investment assets, and their prices rise and fall as people buy and sell them. It’s important to do your research before investing, and remember that transactions are not reversible.
A small set of cryptos are called stablecoins, and they’re designed to be more stable than other coins. They’re pegged to existing currencies, like the US dollar, and are often audited by reputable third parties.
Most cryptocurrencies are built on blockchain technology, which is a decentralized ledger enforced by a network of computers. This makes it impossible to counterfeit or double-spend them. And it allows the coins to exist outside most existing financial infrastructures, making them a potential alternative to fiat currencies like the USD.
While some experts believe that crypto is the future of money, others think it’s a risky fad. The value of most cryptocurrencies can go up and down quickly, and some have lost a significant portion of their value. Additionally, most cryptocurrencies aren’t insured by any traditional financial companies, and investors face risks like hacking and theft.
There are also a number of scams related to crypto. For example, some fraudsters impersonate well-known companies and promise huge returns on investments if you buy their cryptocurrency. These scams usually come in the form of text messages, social media messages, phone calls, or pop-up alerts on your computer. If you receive one of these messages, don’t click on the link or answer the call. And never give your private key to anyone, even if they claim to be from a legitimate company.