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Cryptocurrency Definition
Instead of a tangible piece of currency you can take with you, a cryptocurrency is a digital asset that can be exchanged. The “crypto” part stems from the use of cryptography for security and verification purposes during transactions.
In using cryptocurrency for an exchange instead of fiat currency, crypto owners don’t have to rely on banks to facilitate transactions, and can successfully avoid the fees that come with using financial institutions.
Generally, cryptocurrency transactions are processed and completed via a blockchain network. Blockchains are designed to be decentralized, and so every computer connected to the network must successfully confirm the transaction before it’s able to be processed. Ideally this creates a safer transaction for everyone involved. It can also lead to you waiting awhile; one big complaint about Bitcoin is how long it can take for a transaction to go through.
Cryptocurrency transactions are put into a “block,” and the computers in the network get to work solving a complex mathematical problem. Once a computer solves it, the solution is shown to the others on the network, and if the whole network is in agreement that this solution is correct, that block is added to the chain and the transaction is completed. Multiple transactions in one block makes it harder to edit a single transaction; the network is constantly re-confirming the blockchain on its way to the latest block and will notice should a suspicious edit be made to one transaction in a block.