<p>Cryptocurrency is a digital form of money that relies on cryptographic techniques to secure transactions, control the creation of new units, and verify the transfer of assets. Unlike traditional fiat currencies issued by central banks, cryptocurrencies operate on decentralized networks, most commonly built on <a href="/NewSite/encyclopedia/blockchain/" class="ency-link">blockchain</a> technology, which records every transaction in a public, immutable ledger.</p>

<h2>How It Works</h2>
<p>Each cryptocurrency uses a consensus mechanism—such as proof‑of‑work or proof‑of‑stake—to validate transactions without a central authority. When a user initiates a transfer, the transaction is broadcast to the network, grouped with others into a block, and then verified by nodes (miners or validators). Once confirmed, the block is added to the blockchain, making the transaction permanent and tamper‑resistant.</p>
<p>Users store their holdings in digital wallets that contain a pair of cryptographic keys: a public key, which serves as an address for receiving funds, and a private key, which authorizes outgoing transfers. The security of the system hinges on the infeasibility of deriving the private key from the public key, ensuring that only the rightful owner can spend the currency.</p>

<h2>Why It Matters</h2>
<p>Cryptocurrencies enable fast, low‑cost cross‑border payments, reducing reliance on intermediaries and cutting fees associated with traditional remittance services. For example, a worker overseas can send value to family in another country within minutes, paying only a fraction of the cost charged by banks or money‑transfer operators.</p>
<p>Beyond payments, cryptocurrencies foster financial inclusion by providing access to stored value and investment opportunities for individuals lacking bank accounts. They also drive innovation in areas such as smart contracts, decentralized finance (DeFi), and tokenized assets, reshaping how value is exchanged and programmed in the digital economy.</p>