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A cryptocurrency (or crypto currency) is a form of digital currency created to be secure and anonymous. It achieves this by using the process of converting information into an almost unbreakable code, to track purchases and transfers. Bitcoin became the first decentralised cryptocurrency in 2009.

Think of cryptocurrency as a natural next step for money. You can earn it, spend it, exchange it, or give it away. It appreciates in value, and gets traded on international markets just like any other currency.

 
 

How Does Cryptocurrency Gain Value?

In a word, scarcity. People want it, and they’re willing to pay. If you think of cryptocurrency in terms of supply and demand, all of the details start to fall into place.

Any cryptocurrency sees its market value rise and fall depending on how desirable it is at any given time. Much like gold, there is a limited supply of any given cryptocurrency. But how is that supply regulated?

“Instant transactions, no waiting for checks to clear, no chargebacks (merchants will like this), no account freezes (look out Paypal), no international wire transfer fee, no fees of any kind, no minimum balance, no maximum balance, worldwide access, always open, no waiting for business hours to make transactions, no waiting for an account to be approved before transacting, open an account in a few seconds, as easy as email, no bank account needed, extremely poor people can use it, extremely wealthy people can use it, no printing press, no hyper-inflation, no debt limit votes, no bank bailouts, completely voluntary. This sounds like the best payment system in the world!”
— Trace Mayer J.D., a Leading Monetary Expert on Bitcoin and Gold
 

Mining and Minting

Instead of a central bank controlling when to put new coins into circulation, it’s completely up to the users. The harder you work at creating new coins, the more likely you are to get them.

The process of creating a new unit of cryptocurrency is called mining or minting. There are differences between the two methods, and you can learn all about them here.

But there’s a lot more to cryptocurrency than what it’s worth in dollars and cents -- it also has benefits that traditional money does not.