We could say that cryptocurrencies are digital or electronic means of value that work within a computer or digital networks, and are protected by cryptography. The first and most well-known cryptocurrency that stands out from the rest is Bitcoin.
Cryptocurrencies can be, depending on who you ask, described in different ways. They can be presented as a revolutionary currency, a type of technology, an investment, or as a new way of storing one’s assets. The concept that many agree on is that cryptocurrencies are slowly building the foundation to become the new economy of the future.
To say that cryptocurrencies are just digital money is not entirely correct. Digital money can also be dollars or euros in your bank account, but that doesn’t mean they are cryptocurrencies. A big indicator as to how they differ from more “classic” digital currencies is already hidden in the name. Cryptocurrencies are currencies that are protected by cryptography and exist only in the virtual world. They operate on a technology called blockchain. It, together with cryptography, protects them from being forged or duplicated.
There are several known types of cryptocurrencies, which strongly differ from each other, so it is difficult to formulate a single, general definition. To understand cryptocurrencies as a whole, it is necessary to delve deeper into what types of cryptocurrencies we even know, what types of utility they have, and how they work. We will review all of this in the following chapters.