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Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and to control the creation of new units. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services.
Cryptocurrencies are created through a process called mining. Miners are rewarded with cryptocurrency for verifying and committing transactions to the blockchain. The blockchain is a public ledger of all cryptocurrency transactions. Bitcoin, for example, requires a miner to solve a complex mathematical problem in order to verify a transaction. This process is known as hashing and it is used to secure the blockchain.
Cryptocurrencies are often traded on decentralized exchanges. These exchanges do not require users to provide personal information and allow users to trade cryptocurrencies for other cryptocurrencies or for fiat currencies like the U.S. dollar. Decentralized exchanges also allow users to trade cryptocurrencies for goods and services.
Cryptocurrencies can also be used to purchase goods and services. Bitcoin, for example, can be used to purchase goods and services on Overstock.com, Expedia, and other online retailers. Cryptocurrencies are also accepted by some brick and mortar businesses.
Cryptocurrencies are a relatively new technology and are often associated with speculation and risk. Bitcoin, for example, has been associated with price volatility and has been used by criminals to purchase goods and services online. Cryptocurrencies are also subject to cyber attacks.
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