Cryptocurrencies are digital assets designed to work as a medium (or currency) for financial transactions. They utilize strong cryptography to secure those financial transactions, control the creation of additional units, and verify the transfer of the assets. Cryptocurrencies leverage blockchain technology to enhance their decentralization, transparency, and immutability. One of their most important features is decentralization in that cryptocurrencies are not controlled by any central authority or government. Crypto can be sent directly between two parties, also called Peer-to-Peer (P2P), via a combination of public address keys and private keys, which can help reduce transaction fees by cutting out the middleman like financial institutions.  

Blockchains

Cryptocurrencies record transactions on public ledgers known as “blockchains” and are the first form of digital money where an intermediary is not required to send funds from one person to another person.

Wallets

Cryptocurrencies do not have a physical location; wallets do not hold cryptocurrencies. Wallets only hold the cryptographic keys needed to access one’s cryptocurrencies on the relevant blockchain.

Nodes

Cryptocurrencies do not actually “move” anywhere when you send or receive them. They just change ownership on the respective blockchain, which is stored on nodes all over the world and secured using cryptography. Anyone with the right resources can set up and run a node.

Tokens

Some cryptocurrencies – Auger, Gnosis, Watermelon, Tether – run on top of other blockchains and are often referred to as "tokens".

Privacy

Due to blockchains being public, cryptocurrencies are only pseudo-anonymous. A common goal for many cryptocurrencies is to improve privacy for users, though only some cryptocurrencies make this their main focus (Monero, Zcash).

Confirmations

Double spending can still occur under some rare circumstances, which is why we require a certain number of confirmations before crediting cryptocurrency deposits.

Summary

Cryptocurrencies are a distributed financial ledger that is shared all over the world. The most famous examples of cryptocurrencies are Bitcoin and Ethereum, but there are countless others.

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