What are cryptocurrencies?

The easiest way to explain this is to make the comparison to cash that is supplied by governments (CAD, USD, EUR, etc). When a government prints money, it provides each bill with a unique identification number. When this money is deposited in our bank accounts, it’s the responsibility of the bank to ensure our balance only changes when transactions occur.

Similarly, each cryptocurrency coin is also assigned a unique identification number, and then a blockchain ledger is used to automatically keep track of when these coins are exchanged between parties. Due to the way in which its stored, a blockchain is extremely secure against fraud. Therefore, these digitized currencies have the same features as regular money: they’re unique to identify (this is usually the government’s job), and use a secure ledger of transactions to keep track of ownership (this is the bank’s responsibility). Therefore, these digital tokens offer the same functionality as money. They can even be held in your own personal digital wallet!