what is cryptocurrency 
a cryptocurrency is a digital or virtual currency secured by cryptography which makes it nearly impossible to counterfeit or double spend most cryptocurrencies exist on decentralized networks using blockchain technology a distributed ledger enforced by a disparate network of computers a defining feature of cryptocurrencies is that they are generally not issued by any central authority rendering them theoretically immune to government interference or manipulation investopedia tara anandunderstanding cryptocurrencycryptocurrencies are digital or virtual currencies underpinned by cryptographic systems they enable secure online payments without the use of third party intermediaries crypto refers to the various encryption algorithms and cryptographic techniques that safeguard these entries such as elliptical curve encryption public private key pairs and hashing functions central to the appeal and functionality of bitcoin and other cryptocurrencies is blockchain technology as its name indicates a blockchain is essentially a set of connected blocks of information on an online ledger each block contains a set of transactions that have been independently verified by each validator on a network every new block generated must be verified before being confirmed making it almost impossible to forge transaction histories the contents of the online ledger must be agreed upon by a network of individual nodes or computers that maintain the ledger experts say that blockchain technology can serve multiple industries supply chains and processes such as online voting and crowdfunding financial institutions such as jpmorgan chase co jpm are using blockchain technology to lower transaction costs by streamlining payment processing types of cryptocurrencymany cryptocurrencies were created to facilitate work done on the blockchain they are built on for example ethereum s ether was designed to be used as payment for validating transactions and opening blocks when the blockchain transitioned to proof of stake in september 2022 ether eth inherited an additional duty as the blockchain s staking mechanism the xrp ledger foundation s xrp is designed for financial institutions to facilitate transfers between different geographies because there are so many cryptocurrencies on the market it s important to understand the types knowing whether the coin you re looking at has a purpose can help you decide whether it is worth investing in a cryptocurrency with a purpose is likely to be less risky than one that doesn t have a use most of the time when you hear about cryptocurrency types you hear the coin s name however coin names differ from coin types here are some of the types you ll find with some of the names of tokens in that category if you find a cryptocurrency that doesn t fall into one of these categories you ve found a new category or something that needs to be investigated to be sure it s legitimate 