Cryptocurrency is a form of virtual currency. These Internet-based forms of currency have real-world value equivalents but do not belong to any sovereign nations. Like fiat currencies, their value depends on many factors including demand.
The biggest value seen by users of cryptocurrencies is that they are not (in many cases) regulated by any one country. This gives their users a high degree of anonymity and immunity from general acts of currency manipulation that some fiat currencies are open to.
The Cryptocurrency Ecosystem
Much like how real-word currency is circulated and utilized, cryptocurrency is similar in many ways. For example, you need to either buy or earn cryptocurrency then store it in a digital wallet.
To use cryptocurrency you will need to find a vendor who is willing to accept the currency you have. To get an idea of this scenario, imagine you currently have US dollars. While overseas, some vendors may accept that, but others will want you to convert to a currency they accept.
As a broad overview, the ecosystem consists of:
Miners – These are the ones who invest in the hardware and tools needed to produce cryptocurrency. The process is time consuming and drains much resources.
Buyers/Sellers – These are the largest groups of cryptocurrency users. They use real money to buy or sell cryptocurrency, giving them real value.
Exchanges – Similar to banks, these digital entities allow users to trade cryptocurrencies. Here, you can either exchange one cryptocurrency for another, or buy or sell using fiat currency.
What Types of Cryptocurrency are There?
While many users have heard of the term BitCoin, it is but a single cryptocurrency in what has become an almost endless sea. As of end 2018 there are over 1,600 known cryptocurrencies in existence.
Of course, each of them have their own degrees of popularity and value, but the fact is that so many actually do exist. BitCoin is likely the most recognized name since it was the first cryptocurrency ever introduced and has been around since 2009.
As you can see from the image above, BitCoin also has the largest market capitalization by far at an estimated $158 billion dollars. Aside from BitCoin, other popular cryptocurrencies include Etherium, Ripple, Tether, BitCoin Cash (a spin-off from BitCoin), LiteCoin, ZCash, and many more.