A cryptocurrency is an encrypted data string that denotes a unit of currency. It is monitored and organized by a peer-to-peer network called a blockchain, which also serves as a secure ledger of transactions, e.g., buying, selling, and transferring.[1]

Figure. 1. cryptocurrency

Why is Cryptocurrency rising in popularity?

Some people are reticent about the popularization of cryptocurrencies. Others, however, claim that they are the future of money and are meant to replace traditional centralized coins controlled by governments.[2]

How does cryptocurrency work?

Cryptocurrencies run on a distributed public ledger called blockchain, a record of all transactions updated and held by currency holders.

Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated mathematical problems that generate coins.Users can also buy the currencies from brokers, then store and spend them using cryptographic wallets.

If you own cryptocurrency, you don’t own anything tangible. What you own is a key that allows you to move a record or a unit of measure from one person to another without a trusted third party.

Although Bitcoin has been around since 2009, cryptocurrencies and applications of blockchain technology are still emerging in financial terms, and more uses are expected in the future. Transactions including bonds, stocks, and other financial assets could eventually be traded using the technology.[3]

Cryptocurrency examples

Some of the best cryptocurrencies.

• Bitcoin
• Ethereum
• Litecoin
• Ripple

What can you buy with cryptocurrency?

it is possible to buy a wide variety of products from e-commerce websites using crypto. Here are some examples:

• Technology and e-commerce sites
  Several companies that sell tech products accept crypto on their websites, such as newegg.com, AT&T, and Microsoft. Overstock, an e-commerce platform, was among the first sites to accept Bitcoin. Shopify, Rakuten, and Home Depot also accept it.
• Luxury goods
  Some luxury retailers accept crypto as a form of payment. For example, online luxury retailer Bitdials offers Rolex, Patek Philippe, and other high-end watches in return for Bitcoin.
• Cars
  Some car dealers – from mass-market brands to high-end luxury dealers – already accept cryptocurrency as payment.
• Insurance
  In April 2021, Swiss insurer AXA announced that it had begun accepting Bitcoin as a mode of payment for all its lines of insurance except life insurance (due to regulatory issues). Premier Shield Insurance, which sells home and auto insurance policies in the US, also accepts Bitcoin for premium payments.

If you want to spend cryptocurrency at a retailer that doesn’t accept it directly, you can use a cryptocurrency debit card, such as BitPay in the US

References:

1. https://www.techradar.com/in/news/these-new-city-e-bikes-are-fast-cheap-and-super-fun-to-ride
2. https://honestcolumnist.com/news/hands-on-aventons-sleek-new-pace-ebikes-wont-break-the-bank/
3. https://electrek.co/2022/03/22/aventon-launches-new-pace-500-and-350-electric-bikes-with-big-updates-for-fast-quality-e-bikes/

Cite this article:

Nithyasri S (2022), What is cryptocurrency and how does it work, Anatechmaz, pp. 107