Cryptocurrencies are digital assets designed to facilitate peer-to-peer financial transactions and smart contracts on the internet in a decentralized manner. This was first accomplished by solving the “double spend” problem and by using advanced cryptography and programming.
Cryptocurrencies record transactions on public ledgers known as “blockchains” and are the first form of digital money where an intermediary is not required to send funds from one person to another person.
Cryptocurrencies do not have a physical location; wallets do not hold cryptocurrencies. Wallets only hold the cryptographic keys needed to access one’s cryptocurrencies on the relevant blockchain.
Cryptocurrencies do not actually “move” anywhere when you send or receive them. They just change ownership on the respective blockchain, which is stored on nodes all over the world and secured using cryptography. Anyone with the right resources can set up and run a node.
Some cryptocurrencies – Augur, Gnosis, Melon, Tether – run on top of other blockchains and are often referred to as "tokens".
Due to blockchains being public, cryptocurrencies are only pseudo-anonymous. A common goal for many cryptocurrencies is to improve privacy for clients, though only some cryptocurrencies make this their main focus (Monero, Zcash).
Double spending can still occur under some rare circumstances, which is why we require a certain number of confirmations before crediting cryptocurrency deposits.
Cryptocurrencies are a distributed financial ledger that is shared all over the world. The most famous examples of cryptocurrencies are Bitcoin (XBT) and Ethereum (ETH), but there are countless others.
Here are some links to quality video content explaining bitcoin.
- Bitcoin.org: What is Bitcoin?
- SciShow: How Cryptocurrencies Work
- Vox: How Bitcoin is like the internet in the 80s