A Cryptocurrency is a digital currency that is used for financial transactions as a medium of exchange. It works on Blockchain Technology that uses cryptography to interlinks the blocks containing the transactions. All transactions through cryptocurrencies are recorded with a timestamp on the blocks, making them transparent, secure and immutable. The most popular cryptocurrencies in circulation are Bitcoin, Ripple XRP, Ethereum and Stellar XLM. The use of cryptocurrencies is made possible by storing them in wallets, known as the crypto wallets. These wallets can hold single or multiple cryptocurrencies.
The major difference between a regular currency and cryptocurrency is based on monetary control. While the flow and transactions of normal currency are managed by a single authority (Regulatory bodies, banks, financial institutions etc.), cryptocurrencies are decentralized. They do not require the approval of a third-party to process transactions. As no middlemen are involved, the transaction fee in the case of Cryptocurrencies in considerably less- almost by 5 times.
A can currently make transactions to B only through the Bank. The Bank ensures that A has enough funds to disburse, debits the amount from A’s account and credits B’s account. This process would take an average of 4 hours. However, with Cryptocurrencies, A initiates the transfer of currency through the Crypto Wallet and the transaction is recorded on the Blockchain. B receives the cryptocurrency in a matter of seconds.