Virtual Currency

What is a cryptocurrency?

A Virtual Currency is a digital or virtual currency that operates on a distributed ledger technology called blockchain and uses cryptography for security. It is decentralized and operates independently of any central bank.

Unlike traditional currencies, cryptocurrencies are not backed by physical goods or governments, and their value is determined by market supply and demand. Cryptocurrencies can be used to purchase goods and services, transfer funds, and trade on the market.

Popular cryptocurrencies include Bitcoin, Ethereum, Litecoin, Ripple, and Cronos.

Many cryptocurrencies, like Bitcoin, are created through a process called mining, which involves solving complex mathematical equations to verify and record transactions on the blockchain.

This mechanism is also known as proof of work (PoW). Another consensus mechanism that has become popular due to its energy efficiency is proof of stake (PoS).

PoS relies on network participants to verify transactions instead of mining. The second largest Virtual Currency, Ethereum, uses this consensus mechanism.