Cryptocurrency, in its most fundamental form, represents a peer-to-peer iteration of electronic cash. It facilitates direct online payments between parties without the need for intermediaries like financial institutions. Transactions are timestamped and secured across the network through cryptographic proof-of-work mechanisms. In the Bitcoin protocol, proof-of-work essentially functions as a competitive decoding process, incentivizing participants by rewarding the first to solve the computational puzzle with newly minted coins. This process creates an immutable record of transactions, which cannot be altered without re-executing the proof-of-work.
Cryptocurrency is a subset of digital currency, which encompasses a wide range of forms. Examples of digital currencies include airline-issued air miles, game tokens used in computer games and online casinos, the Brixton Pound (a local currency restricted to the Brixton community in Greater London), and various other types that can be exchanged for virtual or physical goods within closed systems. In open systems, these digital currencies can also be exchanged for fiat currency.
