What Is Cryptocurrency?

KEY TAKEAWAYS:
—Cryptocurrency is a form of digital currency used on the blockchain as a unit of value
—Unlike fiat currency, cryptocurrency is neither issued by banks nor controlled by governments; it autonomously exists on the blockchain.
—Cryptocurrency is decentralized, free from the influence of banks, governments, the Federal Reserve, or any other entities.

Just as there are different blockchain networks, there are also different types of cryptocurrencies. The existence of the entire blockchain is closely related to cryptocurrency. But how are they closely related? Let's explore the connection between cryptocurrency and blockchain.

Relationship between cryptocurrency and blockchain

Cryptocurrencies are inherently related to the blockchain. You can’t have one without the other. But before we get into cryptocurrencies, it’s important to know what a blockchain is: In simple terms, it is a digital ledger. It keeps track of value within the network and stores transactional data. But, there’s no way for us to access its services with cash in your pocket. Blockchains need their own native currency to communicate with the network. That’s where crypto comes along, cryptocurrency is a type of currency you use on blockchains. Similar to how we use tokens at a carnival, we need to use a different ‘type of money’ to access blockchain services. Here is where the concept of cryptocurrency fits in the blockchain ecosystem. These digital coins give us access to the blockchain world, and are called “cryptocurrency.”

Why Is It Called Cryptocurrency?

You might be wondering what could be the reason behind calling this digital money cryptocurrency. The biggest issue with creating a digital currency is the double spending problem. Without getting too technical, it’s hard to create a system that ensures you can’t spend the same funds twice. To eliminate this issue, digital money on the blockchain is secured by “Cryptography” techniques. That is why digital money is called “Cryptocurrency.”

Cryptocurrency is the lifeblood of the entire blockchain ecosystem. It allows you to interact with the platforms and services of a blockchain network. Cryptocurrencies are not managed, governed, or controlled by any central authorities or institutions. Instead, they can power decentralized systems that operate autonomously.

You might not be able to save cryptocurrency in your bank or keep it in your pocket. But its value is as real as the notes in your bank account. In fact, A digital wallet in the realm of cryptocurrency is akin to a bank account in the world of fiat currency.

Cryptocurrencies vs Fiat Currencies: What’s The Difference?

All of those use cases might seem familiar to you. So you may be wondering; what is the difference between cryptocurrency and the money in your bank account? Well, cryptocurrencies have a few major differences from the fiat currencies you already know.

Crypto allows for Decentralized Ecosystems

Fiat currencies are issued by governments that control their supply and circulation. Crypto, on the other hand, is not issued by the government. In fact, many blockchains are governed by holders of the coins themselves. Some blockchains have an unlimited supply of coins, while others have a capped supply. But no single entity can print more coins without reason like governments can with fiat currencies.

Crypto Is Purely Digital

While your fiat currencies exist in physical form, as bills or coins, crypto is purely digital. Your cryptocurrencies exist on the blockchain on an unhackable distributed Ledger, meaning you can’t actually hold a Bitcoin in your hand.

Crypto Is Permissionless

Fiat money varies from place to place. While you may have to change your Dollars to Euros at the European border, you don’t have to do that with crypto. Crypto can cross borders without friction. 

Using Cryptocurrencies Removes the Need for Middlemen

Using fiat currencies relies on middlemen, such as banks or payment services. These are using real people or a central entity’s computer to verify transactions. Trusting centralized entities with your funds can be risky. For example, what if the bank goes bankrupt? Or worse, what if the person who is meant to validate your request for a loan just doesn’t like the look of you? Using cryptocurrencies allows for peer-to-peer transactions, meaning users on the network can transact with each other and the system provides security.

Some Crypto Could be Inflation Hedge

The supply of fiat currency is controlled by the government, whereas the supply of cryptocurrencies like Bitcoin is fixed. The difference in their supply models makes cryptocurrencies an excellent tool for hedging against inflation.

Crypto is anonymous

You don’t have to provide the blockchain with any personal data to own or use cryptocurrencies.

Crypto Transactions Are Forever

Crypto transactions are irreversible. Once you make a transaction,  the blockchain records it immutably and forever. There is no going back. That means if you accidentally send funds to the wrong address, there’s no customer support to help you. That’s why good crypto security practices are so important.

Ledger: Secure Your Cryptocurrency

Now that you've gained an understanding of cryptocurrency and its differences from fiat currency, let's delve into perhaps the most crucial question: If you possess fiat currency, you either withdraw cash and store it in your own safe or deposit it directly in a bank. Similarly, if you have crypto assets, you need a secure place to store your funds. You might already be aware that you can store assets on an exchange, but this carries similar risks to keeping fiat currency in a bank: you can never have 100% control of your funds. Banks can freeze your assets at any time for various reasons, and exchanges can do the same. In addition, exchanges might go bankrupt or even run away with your funds. A hardware wallet is one of the best methods to protect your private keys.

Purchase Ledger

Previously, many users in the Greater China region chose to purchase LEDGER products from overseas due to difficulties in domestic purchasing. However, this approach had long shipping times, required self-clearing customs, and carried the risk of customs delays. Additionally, users were concerned about the authenticity of the products they were buying. Now, as top channel service experts, ShangYi Group aims to address these issues comprehensively. Products will be shipped from Hong Kong with fast logistics and no customs risk. Furthermore, the products are sourced directly from the French headquarters to ensure authenticity and eliminate the risk of counterfeit products.

By purchasing through the official channels in mainland China, customers can also access official after-sales services, providing assistance with any questions or issues that may arise during use.

As the authorized distributor for Ledger in China, please verify the official website at www.sy-collection.com or visit the LEDGER website to get redirected to authorized reseller, clicking on the Greater China region to access the Shangyi official website. For customers in the Greater China region, it is advisable to make purchases through official channels to safeguard your digital assets.