A virtual or digital currency is secured by cryptography and often used as a medium of exchange in a peer-to-peer (P2P) digital economy. These systems are entirely impervious to fraud and counterfeiting due to the use of cryptographic algorithms.
Bitcoin was the first cryptocurrency launched and was released in 2009 under the pseudonym Satoshi Nakamoto. To eliminate intermediaries like banks or governmental organizations from digital financial transactions between users, Nakamoto set out to develop a unique electronic payment system.
Most cryptocurrency systems rely on a blockchain, a continuously expanding list of records that is extremely difficult to alter. In cryptocurrencies, a blockchain is responsible for maintaining a permanent record of all confirmed transactions (and accompanying data), all of which are encrypted by cryptography. As its name suggests, a blockchain is composed of a linear chain of blocks. Each cryptocurrency runs on top of a blockchain that follows a set of predetermined rules (i.e., an underlying protocol). The protocol specifies how the Bitcoin system and blockchain should function.
