cryptocurrency

A cryptocurrency is a form of digital money secured by cryptography rather than backed by a government or physical commodity. Bitcoin, created in 2009 by an anonymous developer known as Satoshi Nakamoto, was the first cryptocurrency to solve the double-spending problem without relying on a central authority, using a distributed network and a proof-of-work blockchain. The conceptual groundwork had been laid decades earlier by the cypherpunk movement, which developed ideas around privacy-preserving digital cash and decentralized value transfer.

Following Bitcoin's launch, thousands of alternative cryptocurrencies (sometimes called altcoins) were created. Some are direct technical variations of Bitcoin's codebase. Others use entirely different consensus mechanisms and have different governance structures. The term "cryptocurrency" is broad: it covers assets designed to function as currencies, programmable platforms, tokenized representations of real-world assets, and many projects with no clear purpose. The common technical trait is that ownership and transfers are recorded on a distributed ledger secured by cryptography, without requiring a trusted intermediary.

Cryptocurrencies differ from conventional digital money, such as bank balances or payment app balances, in a fundamental way: they are not claims on a third party. A bitcoin held in a self-custodied wallet represents direct ownership, enforced by the network's cryptographic rules rather than by a legal contract. The tradeoff is that there is no institution to reverse errors or restore lost access. This property, combined with the significant volatility common in most cryptocurrencies, means they are used in practice for very different purposes by different people, from cross-border transfers to long-term saving.