A cryptocurrency is digital money or asset that can circulate and be used for transactions without the need for government or a central bank to issue it and control it.
Cryptocurrencies are created and circulated using mathematical techniques that allow people to use them to procure items, pay for services, or buy, sell, and trade them securely. It is considered an asset class under many jurisdictions.
The “crypto” in the word cryptocurrency denotes how the digital money is secured through cryptography, which is use of computerized encoding to secure digital information, communications, and online networks from tampering or breaches.
The technology running most cryptocurrencies is called the blockchain, which is a large network of computers where cryptocurrency transactions are recorded in a secure, transparent, and traceable manner that its tamper-proof without the need for a third-party manager or central custodian.
The use of the blockchain prevents people from making copies of their digital assets or spending them more than once.
Units of cryptocurrencies are often referred to as coins or tokens, though each have certain differences depending on their use. They are always in digital format and are stored in digital wallets that can downloaded.
One of the biggest cryptocurrency is Bitcoin invented in 2008 by Satoshi Nakamoto, whose true identity or identities remain unknown. Bitcoins are created through “mining” where powerful computers solve extremely difficult cryptographic puzzles to get validate the transactions in the blockchain and are rewarded with bitcoins.
Other known and actively-traded cryptocurrencies are Ethereum, Binance Coin, Solana, and Tether.
There are thousands of cryptocurrencies in the world and have their own ways to create them. Some do not just act as a currency but have some other utility to their specific blockchain.
Since cryptocurrencies do not rely on central authority or third-party conduit or verifiers like banks, users can transact, trade or transfer value globally almost instantly at anytime. People can buy cryptocurrency from an exchange or another holder.
El Salvador is the first country to use bitcoin as legal tender and was followed by the Central African Republic.
Aside from being traded, some use cryptocurrencies for donations when the traditional financial institutions could not be accessed.
Others use cryptocurrencies to circumvent restrictions, like amount limitations; ensure privacy as traditional proofs of identity are not required; and keep cost of transferring value down.
Cryptocurrencies have gained acceptance and recognition in the Philippines that prompted the establishment of several virtual asset exchanges like coins.ph and Philippine Digital Asset Exchange.
The Bangko Sentral ng Pilipinas has been issuing regulations on cryptocurrencies as early as 2017 or just less than 10 years since Nakamoto released his Bitcoin white paper.