Definition of Cryptocurrency

What exactly is cryptocurrency, how did it get its name, and how is it coded? Take a look at Coin Pursuit's plain-English definition of the term.

When you see the word root “crypto” in the English language, it comes from the Greek, meaning “hidden” or “private.” From it, we get words like “encryption” and “decryption,” which relate to the coding of a message, and its decoding once it's received. Even the English word “crypt”—which uses the Greek root in its purest form—refers to a private hiding place, a sanctuary for the remains of a loved one.

Cryptocurrency, then, means money that is made hidden and private—and therefore secure—by means of encryption, or coding. All aspects of cryptocurrency are protected by long and complicated blocks of code, each of which is unique to the item or person it's protecting. As an investor, or someone taking part in a transaction, you're identified by a one-of-a-kind code, as is the person or company with whom you're doing business. Each “coin” of cryptocurrency itself has its own code, and smaller denominations have their own, as well, depending on what amount is needed for a transaction. Finally, the transaction itself is identified with its own code. Layer upon layer of encryption is one of the things that makes cryptocurrency unique, secure and anonymous, if you so choose. And all that coding and concealment is what gives cryptocurrency its apt name.

As is true in any technical field, the industry of cryptocurrency not only has its unique jargon, but often terms that have synonyms that are used interchangeably. Therefore, we'd like to clear the air on that specific point right here: when you see the terms “digital currency” or “alternative currency” here—or in any other source, for that matter—those are just additional terms for cryptocurrency. As a matter of fact, you'll more than likely see “digital currency” used more often, as it has a less-technical and more user-friendly feel to it.

Next Introductory Topic: Cryptocurrency Origins

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