To make it short: cryptocurrency is decentralized digital money, based on blockchain technology.
Let’s define the words mentioned in the previous phrase. Decentralized, according to the Oxford Dictionary, is defined as:
(of an activity or organization) controlled by several local offices or authorities rather than one single one.
This is where the blockchain comes into play…
Blockchain (defined by Merriam Webster Dictionary) is:
a digital database containing information (such as records of financial transactions) that can be simultaneously used and shared within a large decentralized, publicly accessible network
With that information in mind let’s look at the phrase again: Cryptocurrency is decentralized digital money… - Wait, what’s money?
Money: a current medium of exchange in the form of coins and banknotes; coins and banknotes collectively.
Okay, so the short answer is that Cryptocurrency is literally digital money.
“Crypto” is short for “Cryptography” which is the technique of writing or solving codes (which is what enables data security). Currency is a system of money in general use in a particular country, or in this case digital world or Metaverse or Web 3.0.
Cryptocurrency is digital money. Like money or currencies all over the world there are also several different tokens on the internet that operate in their own special way, like bitcoin, ether, MATIC powering the Polygon protocol and many more. But let’s go back to another key feature of Cryptocurrency - decentralization.
Let’s quickly define what decentralized means as well since it is a key feature to Cryptocurrency. First, let’s define it’s opposite
Centralized: (of an activity or organization) controlled by a single authority or managed in one place
Arguably it is believed that IRL (in real life) money or currency is centralized, controlled by banks or the government. Cryptocurrency on the other hand is controlled by or monitored by the blockchain (see What is the blockchain?).
“At its most basic, a blockchain is a list of transactions that anyone can view and verify. The Bitcoin blockchain, for example, contains a record of every time someone sent or received bitcoin. Cryptocurrencies and the blockchain technology that powers them make it possible to transfer value online without the need for a middleman like a bank or credit card company”*