A Cryptocurrency is a digital currency designed to function as a virtual medium of trade where only private coin ownership details are kept in a public record in a database designed in a virtual fashion. It may have some characteristics of more traditional monetary types such as paper money, physical coins and certificates of deposit (CDs), but the primary feature is that the trading of Cryptocurrency is done entirely through peer-to-peer computer networks without the need for a third party. This is unlike traditional trading, whereby participants in the trade are required to use bank machines, share brokers or trust management systems to trade. Also, unlike traditional trading, a Cryptocurrency does not have the disadvantage of inflation since its values tend to be highly accurate.
Several distinct kinds of Cryptocurrency are available and include the most popular ones – Namecoin, Bitumen, Maidsafe, and Litecoin. Among these, Bitumen is probably the most well-known and used Cryptocurrency in the world today and is primarily created in order to facilitate the transfer of funds within the confines of the Internet, though it can be traded on traditional online marketplaces like the Forex Market or the eBay Physical Product Marketplace. In terms of potential uses, Bitumen can be used as a mobile phone payment platform, a Web-based money transfer facilitator, a distributed application programming interface (API), and even a “bearer” currency, which is backed by real certificates issued by central banks. However, the most interesting characteristic of Cryptocurrency is the fact that it has no distinguishable characteristics such as a physical asset, such as gold, that can be stolen via physical means, such as through a bank robbery.
In other words, if you see the word “Crypto Currency” and you also see the word “currencies”, you should know that it simply means a type of virtual currency. However, there is a difference between Cryptocurrencies and traditional virtual currencies. As we have noted above, there is only one true Cryptocurrency – the Internet’s hash code – but there are dozens of different types of virtual currencies created every day, depending on their creator’s creative thinking. You will likely see several different types of Virtual Currencies in future articles and blog posts, but in the meantime, you may want to understand the difference between Cryptocurrencies and real currencies, and use those to your advantage.