A cryptocurrency is a digital currency that is protected by encryption - process of encoding information. Most cryptocurrencies function without the need for a central authority such as a bank or government, instead relying on a distributed ledger to divide power among their users. A cryptocurrency has a specified monetary policy, such as a fixed token limit or the ability to create new tokens according to predefined regulations.
How does it work?
A technology which is a distributed ledger that records cryptocurrency transaction called Blockchain is used. A blockchain is made up of blocks that store information about each transaction. This data is timestamped and added to the blockchain ledger so that each transaction can be verified by other blockchain participants and cannot be changed. Users agree to pay a small fee in order to execute a transaction on the blockchain, which contributes to the blockchain's overall security.