Cryptocurrency is nothing but a digital currency. Cryptocurrencies are difficult to counterfeit as it uses cryptography for security. These are decentralized systems based on blockchain technology. These are not issued by any central authority, which theoretically makes it immune from any kind of manipulation of interference from anybody including the government.
Bitcoin was the first blockchain-based cryptocurrency and it remains the most popular even today. Apart from Bitcoin, there are several alternative cryptocurrencies with a variety of functions and specifications. Some of these are merely clones of Bitcoin, whereas others are forks, that is new cryptocurrencies separated from the existing ones.
Cryptocurrency has become a global phenomenon among banks, people, governments, and companies. Considered as the money of the future, cryptocurrency is a digital asset developed to work as a reliable medium of exchange. Cryptocurrency transactions are secured through cryptography. With Bitcoins global success, numerous cryptocurrencies are entering the market and have become a popular choice for online investment.
A cryptocurrency wallet is a device, physical medium, program or service which stores the public and/or private keys and can be used to track ownership, receive or spend cryptocurrencies. A cryptocurrency wallet, comparable to a bank account, contains a pair of public and private cryptographic keys. A public key allows for other wallets to make payments to the wallet's address, whereas a private key enables the spending of cryptocurrency from that address. The cryptocurrency itself is not in the wallet. In case of bitcoin and cryptocurrencies derived from it, the cryptocurrency is decentrally stored and maintained in a publicly available ledger called the blockchain.
A cryptocurrency exchange or a digital currency exchange (DCE) is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies. A cryptocurrency exchange can be a market maker that typically takes the bid-ask spreads as a transaction commission for is service or, as a matching platform, simply charges fees.
Digital currency exchange can be a brick-and-mortar business or a strictly online business. As a brick-and-mortar business, it exchanges traditional payment methods and digital currencies. As an online business, it exchanges electronically transferred money and digital currencies. Often, digital currency exchanges operate outside Western countries to avoid regulation and prosecution. However, they do handle Western fiat currencies and maintain bank accounts in several countries to facilitate deposits in various national currencies. Exchanges may accept credit card payments, wire transfers or other forms of payment in exchange for digital currencies or cryptocurrencies. As of 2018, cryptocurrency and digital exchange regulations in many developed jurisdictions remain unclear as regulators are still considering how to deal with these types of businesses in existence but have not been tested for validity.
The exchanges can send cryptocurrency to a user's personal cryptocurrency wallet. Some can convert digital currency balances into anonymous prepaid cards which can be used to withdraw funds from ATMs worldwide] while other digital currencies are backed by real-world commodities such as gold.