WTF is Bitcoin and Cryptocurrencies?

2 min read

You’ve likely heard of Bitcoin and possibly other cryptocurrencies like Ethereum, Dash and Litecoin

But what really is cryptocurrency?! Our video will explain it all to you!

Cryptocurrency at its core is just mathematics, a digital currency formed from cryptography. Cryptography is by definition “the art of solving or writing codes.” But in terms of mathematics and computer coding, cryptography uses algorithms and protocols to secure and scramble information into an encrypted format. Imagine carefully placing letters into boggle, spelling out several words. Encryption is just the action of shaking up that boggle board, while decryption is the process of putting the original messages back together.

Cryptography is all that cryptocurrency actually is. It’s an encrypted string of data that’s been encoded to signify a single specific unit of currency. Solving mathematical problems based specifically on cryptography produces cryptocurrency, a process known as mining.

But unlike fiat currencies, cryptocurrencies are completely digital.

So there’s no physical form of it. You’re never going to be able to hold a bitcoin. You can, however, hold it digitally in a wallet. Other names for crypto currencies include digital currencies, virtual currencies, or crypto for short.

Crypto uses peer-to-peer networks that distribute information and transaction data throughout nodes on the network. This makes it decentralized and allows a transaction of this cryptocurrency to take place in a different manner than traditional finance systems.

Cryptocurrency is not backed by a banking institution or any other centralized financial institution. Rather because it runs on a decentralized network such as a blockchain, it’s backed by the protocols, and the cryptography the network calls for and the users of the network give valued to it.

For more information on WTF cryptocurrency is, check out our full guide page, with all the info and resources you need!

WTF IS is our new series where we explore some of the most frequently asked questions about blockchains, cryptocurrencies, and the technology surrounding these fields. Looking to get acquainted with blockchain? Then WTF IS is the perfect series for you!

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