What is cryptocurrency? What are the main features of cryptocurrencies? What are they used for?

There are plenty of coins in the crypto market. Perhaps you have already heard about bitcoin, litecoin, and ether. They are getting widely popular as an alternative online payment method. However, before converting dollars, euros, or other fiat currencies into crypto, you should have a clear understanding of what digital assets are. It is also crucial to know the difference between cryptocurrencies and traditional money as well as the purpose of such exchange.

What is cryptocurrency?

Cryptocurrencies are digital tokens that can be used as an alternative payment method running on encryption algorithms. Thanks to encryption technology, cryptocurrencies perform two functions simultaneously. They can be a means of payment for goods and services as well as virtual accounting software. If you want to acquire crypto, you need to open a cryptocurrency wallet. This is software that can be a cloud service, a program on a PC, or a smartphone app. The wallet is necessary for storing encryption keys that confirm your identity and give access to your funds.

What are the main features of cryptocurrencies?

Decentralization
Anonymous transactions.
Irreversible transactions.
Lack of a physical form.

What are they used for?

As mentioned above, cryptocurrency can be used as a means of payment for various goods and services just like traditional money. Currently, many companies accept bitcoin and other popular cryptocurrencies as payment.
Digital assets enable users to conduct financial transactions quickly, anonymously, and without intermediaries.
This is a perfect trading instrument. Cryptocurrencies are not backed by gold or supervised by any financial regulators, their exchange rate depends primarily on supply and demand in the market. For this reason, they are extremely volatile. However, it opens up many opportunities for traders.
Their prices usually rise sharply in the long term. So, bitcoin and ether have grown markedly since their launch. Hence, cryptocurrency is a risky but very profitable investment instrument.