OKXCryptoWhat is Cryptocurrency

Understanding Cryptocurrency

What is Cryptocurrency?

Cryptocurrency, much like traditional currency, is designed as a medium of exchange, but uses advanced cryptography functions for resistance against forgery. Moreover, most cryptocurrencies rely on distributed databases called blockchains, which make them decentralized and free from traditional central banking systems.
Due to their nature, cryptocurrencies have many unique use cases, including near-instant and cheap cross-border transfers of wealth, the issuance of non-fungible tokens or NFTs and more. The most well-known cryptocurrency is Bitcoin or BTC, but there are many other cryptocurrencies such as Ether (ETH), Litecoin (LTC) and XRP — all of which have varying functionalities and attributes, and can be easily and securely bought and sold on OKX.
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Differences Between Cryptocurrency and Fiat

What is Cryptocurrency Compared to Fiat?

Cryptocurrency, as opposed to traditional national currencies, also known as "fiat", is not issued by a central bank or traditional financial institution. While they are both used as mediums of exchange, crypto assets can, at times, serve as better stores of value given their deflationary nature. For instance, there will only ever be 21 million Bitcoins in circulation, which makes them scarcer than U.S dollars, which have no such supply limits.

Since cryptocurrencies use advanced cryptography functions, they are also much more resistant to forgery and tampering – issues dealt specifically with the way cryptocurrency transactions are recorded on decentralized ledgers called blockchains.

Moreover, being outside the purview of traditional financial institutions, cryptocurrencies can be transferred globally, within seconds, without the typical barriers and high costs associated with traditional methods of money transfer.

Finally, unlike fiat currencies, cryptocurrencies cannot be physically possessed, nor can they be stored in traditional banks. All digital assets, including Bitcoin, are instead stored in online wallets or addresses, which are only accessible via unique private keys. While this does benefit users in locations where traditional banking networks are sparse or non-existent, it also adds more responsibility on the users to safeguard their own funds.

You can start buying and selling cryptocurrency safely and securely within minutes using a crypto exchange like OKX.

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