A cryptocurrency is a digital currency, which is an alternative form of payment created using encryption algorithms. The use of encryption technologies means that cryptocurrencies function both as a currency and as a virtual accounting system.

Instead of being physical money carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries to an online database describing specific transactions. When you transfer cryptocurrency funds, the transactions are recorded in a public ledger.

What are the 4 types of cryptocurrency?

It can be classify into four categories: Payment Cryptocurrencies, Tokens, Stablecoins, and Central Bank Digital Currencies. Of all cryptocurrencies, the most common are utility and payment tokens. These do not have their investment-backed or guaranteed by regulation.