What is Cryptocurrency?
Cryptocurrency is a digital currency, which can be used as an alternative form of currency. With cryptocurrency, the security and legitimacy of it is maintained by encryption techniques used to generate units of currency and verify the transfer of funds. One use case for cryptocurrency is sharing payment addresses with others so that they can pay you in cryptocurrency without:
1) revealing your wallet address to them (wallet addresses are long and difficult to remember).
2) having them send cryptocurrency directly to all previous wallets it was sent from before reaching your wallet. So in short it goes directly from A to B no intermediary.
Essentially, using cryptocurrency allows you to keep track of who paid you how much without giving out too many details about yourself or your finances.The second most common use for cryptocurrency is the speed and ease of transactions.
For example, cryptocurrency is transferred much faster than traditional banking methods. You can send cryptocurrency in seconds or minutes, with next to zero cost depending on the asset you are sending.
With cryptocurrency, you can also transfer large amounts to another person in just minutes without having to complete any intermediary steps (regarding the need for middlemen discussed later) like you would with any other fiat bank.
The third use case for cryptocurrency is that it creates a sense of security because your identity is pseudonymous when transacting cryptocurrency (depending on the cryptocurrency you are sending) - no one needs personal information before transferring cryptocurrency to someone else's cryptocurrency wallet. Cryptocurrency wallets are encrypted with the use of cryptography so only the owner has access to their wallet address and its associated funds. Unfortunately, this results in illegal activities taking place using cryptocurrency due to the lack of transparency related to transactions. This is one of the topics the media keeps bringing up, but nobody takes a second to think that up to the creation of cryptocurrency ALL illegal activities were undertaken using the money we still use today; USD, GBP, EUR, JPY etc.
When Bitcoin was first created, there were many different cryptocurrency wallets available; all of them allowing you to remain anonymous (allowing cryptocurrencies to be transferred without sharing any information). Nowadays, most cryptocurrency wallets require identification before using their services. For example if I want to transfer cryptocurrency from my wallet, which is linked with my personal bank account(s) or credit card(s), I would need verification by providing proof of identification, proof of address and residency of the country I reside in. The cryptocurrency wallets I use at the moment are the following: Casa - for my deep cold storage; Keystone - for my cold storage; Celcius - for earning interest on by crypto; Bottlepay - for day to day transactions and dollar cost averaging into Bitcoin. For a detailed guide on how I personally buy, manage and store my Bitcoin i have made a handy dandy guide here.
What cryptocurrency basically means - cryptocurrency (or digital currency) is a form of digital money that was created and managed through the use of advanced encryption techniques known as cryptography.