Cryptocurrencies first appeared with the creation of Bitcoin in 2009—today, they’re the hottest topic in the financial industry. So what exactly are they?
Cryptocurrencies—sometimes referred to as virtual currencies, digital money or altcoins—are a medium of exchange much like any other currency. Where they differ, however, from conventional, government currencies, like the dollar, the pound and the euro, is that they are not issued or controlled by a central bank. On the contrary, they are decentralized and owe their existence to complex mathematics and cryptography, namely the blockchain. Cryptocurrencies are entries in the blockchain’s virtual ledger, stored on the computers of crypto currency community members around the globe. Cryptocurrencies are rapidly gaining international acceptance and are seen by many, including the major banks, as the future of financial transactions.