What is cryptocurrency?

Cryptocurrency is a digital currency, which is an alternative form of payment. Cryptocurrency isn't regulated by any government. Cryptocurrency is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend digital money. Many cryptocurrencies are decentralized networks based on blockchain technology. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.

The establishment of the first cryptocurrency Bitcoin in 2008 coincided with the global financial crisis but financial sovereignty was the fundamental issue of the army of cryptographers who had been working on a decentralized electronic cash solution for decades. The main difference between fiat currency and cryptocurrency is that cryptocurrency doesn't require government backing, while conventional currency depends on it. The developers of any cryptocurrency make decisions on its emission, proof protocols and burning mechanism (to avoid inflation). Development of crypto exchanges and crypto infrastructure increases liquidity factors of cryptocurrencies.

All types of cryptocurrencies can be roughly divided into two main types: coins and tokens. Coins are any cryptocurrencies that run on a separate blockchain. Examples are Bitcoin, Ethereum, XRP and many others. Altcoins is the name for all coins other than Bitcoin.

Tokens are cryptocurrencies that do not have their own blockchain and run on the network of another coin using smart-contracts – programs which execute the agreements of developers and users automatically. Web3 games could use coins as a main currency in game or issue their own tokens, which could be traded on decentralized exchange. Often developers of the games give an option for the web3 community to buy their tokens on initial offering (IDO or ICO) – before the game launch. It is a form of crowdfunding and investing mix to test the game idea, enroll first users and attract investments for development and marketing.

As of November 2022, there are 21,844 cryptocurrencies in existence. However, not all cryptocurrencies are active or valuable. Discounting many “dead” cryptos leaves only around 9,314 active cryptocurrencies. There are upwards of 300 million cryptocurrency users across the globe. Most financial professionals expect digital assets will present a solid alternative to government-issued currencies within a decade, and someone supposes that even could replace it (according to “Business Insider” report published in August 2021, quoting a Deloitte survey).

Cryptocurrencies, like any new phenomenon and technology, of course, have its problems and side effects. But for sure we can say that this sphere is intensely developing now, and it is impossible not to pay attention to it.