Cryptocurrency is a digital alternative to traditional money and financial assets. Also known as virtual currency, cryptocurrency offers a decentralized money system and a means to store monetary assets. Based on blockchain technology, there are over 5,000 cryptocurrencies in circulation today. Used as a medium of exchange for transactions, individual coin ownership records remain stored in a database that serves as a computerized ledger. Cryptocurrency makes it easier to secure purchases, create additional coins as needed, and verify the transfer of coin ownership, thanks to strong cryptography. You can use cryptocurrency to purchase goods and services. However, many people use cryptocurrency to invest in other non-centralized monetary system assets like precious metals or stocks. Cryptocurrency is still relatively new, offering exciting possibilities.

Cryptocurrency relies on the blockchain for two things — maintaining its distributed ledger system and providing a way to earn the cryptocurrency. As it relates to the distributed ledger, the blockchain grants access to all transactions for the participants within the blockchain. It's said to do this securely with the use of nodes, which are the computers run by blockchain participants to validate transactions. These nodes can solve computational puzzles, by coming up with hashes, which are strings of 64 numbers with a base of 16, as opposed to base 10, which people typically use. In this way, nodes on the blockchain validate different aspects of transactions. This may include details such as the validity of the amount being transacted, the parties involved in the transaction, the value of the currency being sent, and that the sender’s crypto wallet has the needed funds. Thanks to this blockchain system, participants can mine to earn crypto by successfully solving for the correct hash.

As more people explore the world of cryptocurrency, it isn’t unusual to feel overwhelmed by the sheer number of available options. Within the past decade, this novel currency option has exploded amid a world of uncertainty over many issues, including finances. With at least 5,000 available cryptocurrencies, it might help to try to come up with the most popular to give you some direction as you start out. Some top options include the widely known and accepted Bitcoin (BTC), smart contract-based Ethereum (ETH), the blockchain-heavy Polkadot (DOT), and Cardano (ADA), known for quick transactions and smart contracts. As you do your research, remember to try to find one that fits your trading or transaction style or strategy, budget, and short-term and long-term investment plans.