Bitcoin Global News

What Are Cryptocurrencies?

In its simplest form, a cryptocurrency is a digital or virtual currency.

It’s a medium of exchange using cryptography to send secure transactions and control creation of new units.

You might be thinking: Aren’t cryptocurrencies a fad?

I can understand how it must seem that way. After all, what’s to stop anyone from just creating a digital currency?

What actually gives a digital currency value?

Cryptocurrencies create value through the so-called network effect.

The more something is used, the more demand is created for it.

So, what’s driving demand for digital currencies?

Here are a few reasons:

• They cannot be diluted. They have a set schedule of when they are released (and most have a finite supply).
• There is no central authority. So, the value of digital money dictated by the marketplace, not a central bank.
• They cannot be confiscated. Digital currencies do not have a central computer so they can’t be shut down or stolen by the government.
• They are highly portable. You can carry $1 million worth on a thumb drive smaller than the size of a lighter.

-Author, Teeka Tiwari