Cryptocurrency
What Is Cryptocurrency?
Cryptocurrencies (often referred to as “crypto”) are decentralized digital currencies.
They are not issued or governed by a central bank.
Some cryptocurrencies are created by developers, while others are generated by network algorithms.
Unlike physical banknotes or coins, cryptocurrencies exist purely in digital form.
How Does Cryptocurrency Work?
Digital Currency: Cryptocurrency is essentially digital currency that exists only on computers.
Peer-to-Peer Transactions: Transactions occur directly between peers without intermediaries like banks.
Blockchain Technology: Cryptocurrency transactions are recorded on a digital public ledger called a blockchain.
A blockchain is a chain of blocks, where each block contains a list of transactions.
The ledger is encrypted using cryptography, which is why it’s called “crypto” currency.
Key Points:
Market Structure:
Cryptocurrencies are traded globally on various platforms.
Major financial centers participate in this decentralized market.
Currency Pairs:
Cryptocurrencies trade against each other in pairs (e.g., BTC/USD, ETH/BTC).
Each pair represents the exchange rate between two digital currencies.
Why Invest in Cryptocurrency?:
Speculation: Investors bet on price movements.
Hedging: Manage risk related to traditional currencies.
Portfolio Diversification: Include crypto for balance.
Continuous Trading: The crypto market operates 24/7 across different time zones.
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