What is cryptocurrency?

Cryptocurrency, often shortened to crypto, is a form of digital money that moves over the internet without a bank in the middle. Ownership is recorded on a shared database called a blockchain, which is kept by thousands of computers and not by any single company or government. Bitcoin, launched in 2009, was the first. Thousands of others have followed.

What does the name mean?

"Crypto" comes from cryptography, the mathematics of securing information. Each owner holds a secret code called a private key, which works like a signature that cannot be forged. A payment is valid only if it is signed with the right key.

"Currency" reflects the original aim, which was to create money that people could send to each other directly online.

How is it different from money in a bank?

Money in a bank account is a record on the bank's private books. The bank checks your identity, approves your payments, can reverse a mistake and can freeze the account. In many countries, deposits are also insured by the government up to a limit.

With cryptocurrency, the record is a public ledger that anyone can inspect. Nobody approves a payment in advance. The network checks only that the sender has the coins and has signed correctly. That brings some freedoms and some burdens:

• Payments can be sent at any hour, to anyone, across borders.
• A confirmed payment generally cannot be reversed.
• If you lose the key, there is no help desk to restore access.
• Holdings are not covered by deposit insurance.
• No central bank manages the supply. Rules written into the software do.

What are the main kinds?

• Bitcoin. The first cryptocurrency, designed as scarce digital money. See what bitcoin is.
• Platform coins. Coins such as ether, which pay for running programs on networks like Ethereum.
• Stablecoins. Tokens designed to hold a steady value, usually one US dollar. See what a stablecoin is.
• Meme coins and other tokens. Thousands of smaller assets, many created for a specific app, community or joke.

The words bitcoin and crypto are often used as if they meant the same thing, but bitcoin is only one cryptocurrency among many.

Why is it controversial?

Supporters see a payment system open to anyone, with rules that no single party can change. Critics point out that prices swing sharply, that most activity is speculation and not everyday spending, and that removing the middleman also removes the protections a middleman provides.

Fraud is common, and regulators in many countries are still writing the rules. Both views are part of an accurate picture.