What does digital currency mean?

Digital currency is a digital currency based on blockchain technology and is not controlled by governments or financial institutions. Features include decentralization, anonymity, scarcity, and global liquidity. Popular digital currencies include Bitcoin, Ethereum, and Stellar. Applications include payments, remittances, investments and smart contracts.

Digital Currency: A Concise Definition

Digital currency, also known as cryptocurrency or virtual currency, is a digital currency based on the Internet using cryptography technology. Unlike traditional currencies, it is not controlled by governments or financial institutions.

Principle of operation:

• Blockchain Technology: Digital currencies rely on a distributed, immutable ledger called a blockchain. Blockchain records and verifies all transactions, ensuring security and transparency.
• Encryption Algorithm: Encryption technology is used to protect transactions and store assets securely. The most commonly used encryption algorithm is the hash function, which converts data into a unique and irreversible string.

main feature:

• Decentralization: Digital currencies are not controlled by a single entity. Transactions are verified and processed through multiple nodes in the network, increasing security.
• Anonymity: Although encryption technology can provide anonymity protection, some digital currencies still allow user identities to be tracked.
• Scarcity: Many digital currencies have a limited supply, which simulates the scarcity of precious metals.
• Global Liquidity: Digital currencies can be sent and received globally without geographic restrictions.

Popular digital currencies:

• Bitcoin (BTC)
• Ethereum (ETH)
• Litecoin (LTC)
• Stellar Lumens (XLM)
• Ripple (XRP)

Application:

Digital currency has a wide range of applications, including:

• Payment: Purchase of goods and services
• Remittance: Low-cost and fast cross-border transactions
• Investment : Some digital currencies have speculative value
• Smart contracts: Blockchain-based protocols that automatically execute contract terms

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