What is a cryptocurrency?

Cryptocurrency, or also slang for “crypto”, is a digital currency that is not dependent on any central authority, government or bank. It is a decentralized system that uses internet access to an open ledger, called a blockchain, to verify a transaction. It is cryptographically secured so that it cannot be reversed or modified without the consent of the entire network. Each cryptocurrency uses its own blockchain and therefore cryptocurrencies cannot be sent to the blockchain addresses of another currency.

Cryptocurrencies work wherever there is an internet, and they approve individual transactions through what is called consensus, or confirmation by all participants in the network.

There are currently about 22,000 different cryptocurrencies and this number is growing every day.

Cryptocurrencies are not considered currencies in developed economies, their definition varies from territory to territory and each country’s legislation treats it differently.

Some states classify cryptocurrencies as commodities, others as securities or goods (in the Czech Republic, they are intangible movable property). In general, cryptocurrencies are viewed as a separate asset class.

In El Salvador and the Central African Republic, the cryptocurrency Bitcoin has been recognised as legal tender. Other countries, such as Brazil, legally recognise it as an investment asset.

Cryptocurrency designations

Each cryptocurrency has its own name — Bitcoin, for example — and a capitalised abbreviation, such as BTC, that defines it in the cryptocurrency market. The entity name of a cryptocurrency may differ from the name of the cryptocurrency. For example, the base unit of the cryptocurrency Ethereum is 1 ether. The base unit of the cryptocurrency Bitcoin is 1 bitcoin.

For example, a complete list of all existing cryptocurrencies and their designations can be found here (https://www.coingecko.com/).