# 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?

1. **Digital Currency**: Cryptocurrency is essentially **digital currency** that exists only on computers.
2. **Peer-to-Peer Transactions**: Transactions occur directly between peers without intermediaries like banks.
3. **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.