What is a cryptocurrency?
The world economy is striving towards becoming a global market with every passing day. The introduction of digital cash and e-wallet was a huge step in this direction which allowed citizens to indulge in international transactions. However, this approach gained an electronic definition with the instigation of cryptocurrency and Bitcoin wallet through the hands of Satoshi Nakamoto on 9th January, 2009.
To put it simply, cryptocurrency is a decentralized peer-to-peer electronic cash system. It is a virtual currency used to transfer funds or indulge into transactions without the involvement of any government-legal cash.
The sender or receiver initiates the trade and no third party participates in a peer-to-peer trade. There is no online merchant or middle-man regulation. The sender initiates a trade by sending Bitcoin to the receiver. The receiver can then exchange the cash to $, €, £ or any other currency of his or her choosing. Cryptocurrency transactions are almost instant and protected by strong cryptography. Most cryptocurrencies use blockchain technology. Any transaction on the blockchain is irreversible and thus charge-back scams are impossible.
Cryptocurrencies have many benefits over regular currencies, becuase in many cases, they are so much more than just a means of trade.
A decentralized currency will allow you to send money instantly for very low fees compared to regular bank transfers today. The reason behind this is because right now traditional banks and payment processors serve as trusted third parties. We rely on them to send our money and keep track of our transactions and for this service, they charge high fees. Using Bitcoin or Ethereum, there is no need for a trusted third party because every transaction is transparant and stored on the blockchain which is then verified by the network.
Bitcoin is fundamentally a currency, but the blockchain technology on which it is built allows for many other uses.
Ethereum has embraced this, and has set out to become the main platform on which to build dapps (decentralized applications). With the blockchain technology you can for example store information in a decentralized way, which means you do not simply have one server on which you keep your data, instead you put small pieces of your data on many different servers connected to the network. This is a lot safer than a centralized server because a centralized server is easy to attack, hack and steal the information off.
This is only the tip of the iceberg. Today there are multiple ICOs (Initial Coin Offerings) on Ethereum every week, in which you can buy tokens (pieces) of the application using your Ether and support and invest in whatever you think is better done on the Blockchain than in the traditional tech-industry.