Cryptocurrency Technology, History, and Economics

Cryptocurrency Definition and Classification

Cryptocurrency is a digital asset that uses distributed ledger or blockchain technology to record ownership and enable secure, peer-to-peer transactions. A blockchain is a continuously expanding, cryptographically linked record of transactions maintained by a distributed network. Consensus mechanisms, especially proof of work and proof of stake, validate transactions, prevent unauthorized changes, and help regulate the creation and transfer of coins. Cryptocurrencies are generally pseudonymous rather than fully anonymous, and users manage their assets through wallets containing public and private keys. Although called currencies, cryptocurrencies are not universally treated as traditional money. Depending on the jurisdiction, they may be classified as commodities, securities, currencies, or a separate asset class. Major categories include Bitcoin, alternative cryptocurrencies or altcoins such as Litecoin and Ethereum, stablecoins designed to maintain relatively stable purchasing power, and memecoins created from internet memes or jokes. These categories differ in purpose, technology, stability, and risk; stablecoins may lose their intended peg, while memecoins are often highly volatile and vulnerable to scams.

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Blockchain as a Distributed Ledger

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