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Cryptocurrency definition
A cryptocurrency is a digital asset secured by cryptography that records ownership and transfers on a decentralised network rather than through a central authority. It produces a transferable unit of value that can be sent peer to peer without a bank in the middle.
Each transaction is broadcast to a network of computers, validated against the shared transaction history, and added to that record once the network agrees it is valid. Supply rules, issuance, and transfer logic are set in software and enforced by the network, not by a central bank.
Fiat currency, such as the US dollar or the euro, is the natural opposite: it is issued and backed by a government and managed by a central bank, with supply set by policy. A token is a related but distinct case; a cryptocurrency typically runs on its own blockchain, while a token is issued on top of another chain rather than securing one of its own.
Cryptocurrency Example
You hold 2 units of a cryptocurrency priced at 1,500 USD each and send 1 unit to a friend.
The network deducts 1 unit plus a network fee from your balance and credits the friend's address:
2 - 1 - 0.01 fee = 0.99 units remaining
No bank approves the transfer; the network validates it and records the new balances on the shared ledger.
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