A cryptocurrency is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a digital ledger or computerized database using strong cryptography to secure transaction record entries, to control the creation of additional digital coin records, and to verify the transfer of coin ownership. Each cryptocurrency works through a blockchain that serves as a secure decentralized financial transaction database. It refers to chains of data entered into a digital ledger as data blocks which are discovered by "mining", then linked chronologically and secured with cryptography, making them impossible to change. Each block represents a portion of a cryptocurrency that can be stored in a virtual wallet, and owned and traded like any other form of currency.
In terms of security, owners can tell others or make public a cryptocurrency address without compromising its corresponding private key. To be able to spend their cryptocurrency, the owner must know the corresponding private key and digitally sign the transaction. A network verifies the signature using the public key. To ensure the security of a cryptocurrency, the private key must be kept secret and must never be lost, as it would be impossible to compute.
Traditional currencies (digital or paper money) face the constant issue of inflation where more money can be created which causes value dilution across that currency. Cryptocurrencies address the issue of inflation by creating a fixed creation schedule and capping the total maximum amount of cryptocurrency that can be created.
Almost every country has its own unique currency which causes issues when traveling, making transactions in different countries/currencies. Cryptocurrencies are not tied to their country of origin so they are truly global in nature.
Traditional currencies need middlemen or banks to digitally move that currency from one person to another. These can be slow and every transfer has a cost. Cryptocurrencies can be instantly transferred from one person to another across the globe.
Bitcoin, first released as open-source software in 2009, was the first decentralized and commercial cryptocurrency. Mining bitcoins, typical of most cryptocurrency, becomes increasingly difficult over time. Initially GPUs were used but as of 2021 large arrays of mining rigs using parallel GPUs are used, consuming vast amounts of power. Eventually it would become economically unfeasible to mine, as its value would be less than the power needed to mine the next bitcoin (unless its value increases to stay within the curve). Ethereum, on the other hand, are still possible to mine with PCs outfitted with one or two GPUs; however it would be more efficient to mine with a rig of more GPUs.
Cryptocurrency eventually replaced virtual digital currency which in turn replaced paper money which in turn replaced bartering. Due to its decentralized nature, it led to the devaluation and breakdown of world economies by Type I.