What is cryptocurrency?
A cryptocurrency is a type of digital currency – meaning that it exists solely on its own virtual network. Cryptocurrencies operate on a peer-to-peer basis, therefore they are transparent, decentralized, and immutable on a ledger called the blockchain. Essentially, they exist as virtual money that can be spent on items or services, and exchanged using fiat and cash. There are several mainstream cryptocurrencies such as Bitcoin, Litecoin, and Ethereum, however there are more than 100 different currencies available. Each has its own purpose and can be purchased, exchanged, and traded.
How does one store a digital asset?
Because cryptocurrencies are on a decentralized network, they are stored in cryptographic addresses called digital wallets. These wallets are stored a cryptographic address which is unique to each individual while being transparent, yet immutable on the blockchain. Each address contains either a passphrase and password to access the funds or a private key. Without the combination of a passphrase or private key you will not be able to access your funds thus making security a primary aspect of cryptocurrency. Wallets can be stored in several ways such such as offline or online. Offline storage or “cold storage” refers to paper wallets, USB drives, and other devices not readily connected to the internet.
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