The Blockchain Portal
CRYPTOCURRENCY
There are no physical cryptocurrencies, only balances kept on a public ledger in the cloud, that – along with all cryptocurrency transactions – is verified by a massive amount of computing power. Almost all cryptocurrencies are not issued or backed by any banks or governments, nor are individual cryptocurrency valuable as a commodity. Despite it not being a legal tender, Bitcoin charts high on popularity, and has triggered the launch of other virtual currencies collectively referred to as Altcoins (Alternative Coins). There are still many things to discover…
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Traditional currency is issued by some central body (a central bank), which has the authority to create or remove the currency from circulation. The risk is that the issuer is in the short term motivated to print more money, which dilutes the value of the currency for anybody who holds it.
This is not the case for example with bitcoin, where the creation of new coins cannot be controlled by anybody individually, and is very predictable. Not all cryptocoins are created equal, some have centralized authority that can control them much like a central bank (but this would be a fringe minority).
