--- title: "What is cryptocurrency and how does it work?" description: "What is cryptocurrency and how does it work?" author: "QuestGLT" published: 2024-02-05 updated: 2024-02-05 canonical: https://answers.mindstick.com/qa/109930/what-is-cryptocurrency-and-how-does-it-work category: "cryptocurrency" tags: ["cryptocurrency"] reading_time: 1 minute --- # What is cryptocurrency and how does it work? The [Cryptocurrency](https://www.mindstick.com/articles/23283/create-your-own-cryptocurrency) system is a payment system that doesn't depend on banks to confirm [transactions](https://www.mindstick.com/interview/307/explain-acid-rule-of-thumb-for-transactions). It's a peer to peer system that allows anyone in the world to send and receive money. Instead of being actual cash that is exchanged and carried around in real life the cryptocurrency payment system functions as [digital](https://www.mindstick.com/articles/85590/how-to-create-a-productive-digital-workspace) entries into an online [database](https://www.mindstick.com/articles/100/windows-service-to-update-record-from-one-database-to-another-after-certain-interval-of-time) which outlines specific transactions. When you transfer funds from cryptocurrency and make transactions, they are logged in the public ledger. The cryptocurrency is kept inside digital wallets. Cryptocurrency is named so because it makes use of [cryptography](https://www.mindstick.com/articles/333343/exploring-quantum-cryptography-and-next-gen-defense-mechanisms) to [validate](https://www.mindstick.com/forum/1490/what-is-better-solution-for-validate-form-textboxs-value) transactions. This implies that advanced coding is utilized in storing and transferring cryptocurrency data between the wallets and public ledgers. The purpose of [encryption](https://www.mindstick.com/articles/44101/encryption-101-a-broad-overview) is to offer [security](https://www.mindstick.com/articles/1671/wcf-security-in-dot-net-technology-using-c-sharp) and protect. One of the first cryptocurrencies was [Bitcoin](https://www.mindstick.com/articles/54891/three-reasons-to-invest-in-bitcoin-in-2019) that was created in 2009 and is still the most popular in the present. The main reason people are interested in cryptocurrency is [trading](https://www.mindstick.com/blog/302522/the-basics-of-forex-trading-what-you-need-to-know-to-get-started) to make money, and the speculators sometimes driving prices to the sky. --- Original Source: https://answers.mindstick.com/qa/109930/what-is-cryptocurrency-and-how-does-it-work Copyright © MindStick Software Pvt. Ltd. This Markdown version is provided for developers, AI systems, and offline reading.