Cryptocurrencies are digital coins protected against counterfeiting and kept in digital wallets. At first glance, a cryptocurrency appears very similar to a regular electronic payment system; however, its internal structure holds fundamental differences. The main distinctive features are the P2P architecture and the lack of an issuing center. Each crypto-wallet is a bank of its own. The plenitude of computers with crypto-wallets scattered across the globe form a giant cross-connected banking structure that functions in a completely automatic mode around the clock.
Moreover, anyone wishing can create a mint at home; you only need a personal computer with sufficient specs, or just a dedicated board, which will produce (or “mine” on the jargon of cryptocurrency users) the digital coins for you. With that, the worthiness of the newly-mined coins is equal to that of all other cryptocurrency units.
To top it all, anyone wishing can even invent a cryptocurrency of their own! If your creation gets deemed credit-worthy by a sufficiently large group of people, it can become a global means of payment! How’s it done? From the standpoint of an average Joe, digital coins are no different from ordinary computer codes used on the web to encrypt regular monetary transfers. However, if you’re dealing with an ordinary currency, you need to pour the funds in first in order to use the currency on the Internet. On the other hand, a cryptocurrency is “born” in the global network. If it’s deemed credit-worthy, it becomes a means of payment. The way gold nuggets, colorful notes, shells or pebbles did in the course of history.
Modern P2P crypto-currencies have no issuing centers at all. There are no fees for money transfers; no connections with banks or other intermediary organizations. The only exceptions are online currency exchanges used to buy bitcoin by credit card or withdraw funds from a crypto-wallet. Lastly, inflation is impossible, as the amount of cryptocurrency units is limited and can’t exceed a certain value.