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What Are Cryptocurrencies?

Olivier Dardant, CFA® | March 18 , 2022

What Are Cryptocurrencies?

Cryptocurrencies, referred to as cryptos, are digital currencies not controlled and/or regulated by any government or agency. Two things define cryptos: a lack of central authority and/or regulation (DeFi, or decentralized finance) and the blockchain.

• Cryptos are decentralized. Anyone from anywhere can join the network through decentralized applications (dApps), and cryptos allow for some anonymity as users are not required to identify themselves.

• The blockchain is a ledger of all transactions that have occurred chronologically. Instead of being stored in a central location, every computer that is a part of the network (running software called bitcoin client in the case of bitcoin and for ethereum) stores and validates the information constantly. This allows thousands of different computers to validate the authenticity of a transaction before it's accepted into the ledger. This also removes the need for intermediaries in transactions.

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