A Brief Introduction to Cryptocurrencies

A Cryptocurrency, like any other digital asset, is an asset that can be measured in terms of its value and is usually issued under the agreement of two parties. It is usually traded and purchased electronically through a virtual network of computers. A decentralized system of coordination called the distributed ledger is at work here. A cryptography, which is the science of encoding messages securely on diverse scales, is used to ensure that the information being stored is retrievable and accessible by anyone.

A Cryptocurrency can be defined as any digital object that employs a proof-of-work schedule to establish the legitimacy and integrity of its issuance; and is controlled and governed by a self-governing community called the network. The most well known forms of Cryptocurrencies are the peer-to-peer lending and trading platforms available on the Internet, such as the World Wide Web’s open source Open Financial Exchange or Forex, as well as proprietary databases controlled by web-hosting companies such as Amazon Web Services’ AWS. A Cryptocurrency may be expressed in many different forms. In a transaction between two parties, the asset being exchanged is usually one of several pre-set currencies, such as the U.S. dollar and the British pound, or an asset that is convertible into one of the pre-determined currencies, for example the Swiss franc and the Canadian dollar.

The real currencies that are usually used in Cryptocurrency transactions are usually the ones issued by governments or central banks. There is a great deal of speculative activity associated with Cryptocurrencies. A lot of investors are buying alt-currencies, i.e. currencies outside their designated group. This can be seen as an attempt by investors to exploit the move of one group against another. However, there is no real assurance as to the long term performance of these currencies.