Cryptocurrency
A digital asset secured by cryptography, not issued by a central bank.
Cryptocurrencies like Bitcoin run on decentralized networks. Prices can be highly volatile.
A cryptocurrency is a digital asset that runs on a decentralized network rather than being issued or backed by a central bank. Transactions are recorded on a blockchain, a shared ledger that no single party controls, and secured by cryptography. Bitcoin was the first; there are now thousands, with very different designs and uses.
The trade-off is that removing a central authority also removes the backstops of traditional finance. Prices can be extremely volatile, moving double-digit percentages in a day, and the space carries risks that regulated markets do not, from smart-contract bugs to outright scams. Sentiment swings hard and fast, which is why tools like a crypto fear and greed index exist to gauge whether the crowd is panicking or euphoric.