Crypto-currency is a virtual currency that people create and use to control the exchange of money. The word cryptocurrency is a combination of two words – crypto meaning information’ and currency meaning money’. The defining characteristic of most cryptocurrencies is their decentralized nature, i.eThey are not sponsored by any government entity, central bank, or other third-party organization like PayPal or Visa.
Most crypto-currencies are built on a blockchain
This is a digital public ledger of transactions that’s created by people using the crypto-currency. For example, if Alice sends Bob 10 coins and this exchange gets added to a blockchain, it will be recorded on every copy of the blockchain and accessible to anyone on the network. This has several important properties:
The transaction is transparent as it can be viewed by anyone on the network. The transaction can’t be changed or removed by a single person or group because information on a blockchain is immutable (cannot be altered) and transparent (can be viewed by anyone). For example, if people knew Alice had sent Bob 10 coins, they would know whether she had actually received them or not. If she sends them back, they will know that too.
Crypto-currencies come with programmable money and the ability to create smart contracts
One of the most interesting things to arise out of crypto-currencies is programmable money. This refers to the possibility of creating special coins that can only be spent for a particular purpose, like paying for an ad on a website or paying for an IOU from someone. For example, Alice and Bob might enter into a contract in which Alice agrees to buy something from Bob if Bob doesn’t deliver within two weeks. She could create a smart contract in which this agreement is recorded on a blockchain as proof of the outcome. If Bob doesn’t deliver, Alice would not have to pay him and vice versa.
Decentralized exchanges make crypto-currencies accessible to anyone with a connected device
Unless you’re an expert in cryptocurrencies, you might find it hard to acquire them in the first place. There’s no bank account number or piece of plastic for reference, so until recently the only way to buy them was through centralized exchanges or marketplaces that match buyers and sellers. While these sites have been useful, they’ve also been hacked and posed a single point of failure that could destabilize cryptocurrency if they were compromised. This is why decentralized exchanges are taking off as they allow crypto enthusiasts to transact directly with one another without intermediaries.
The Monetary Freedom Index is a quantifiable measure of the value of crypto-currencies
The Monetary Freedom Index is a tool that allows people to compare crypto-currencies using a single number. It was created with the goal of creating a broad model that could be applied across different kinds of coins and be used as a dynamic measure of their value. A MOI value of 1 signifies total freedom and 0 means no freedom at all. This is important because it allows people to compare and contrast different coins, measure their value over time, and evaluate which are more economically and socially valuable.