News for Kids: What is cryptocurrency and how does it work in the digital world?

The digital world is ever growing and ever-changing — and now new ways of paying for things in the digital world are expanding, too.

Here we look at cryptocurrencies — what they are, if they are legal, if they are here to stay, and how you can use them.

What are cryptocurrencies?
Cryptocurrencies are digital tokens, they are not physical coins or cash. They are a type of digital money that allows people to make payments directly to each other through an online system. They were set up to allow person-to-person transactions without the need for banks.

Cryptocurrencies have no value set by law. They are simply worth what people are willing to pay for them in the market.

How many cryptocurrencies are there?
Just as there are many different traditional currencies in the world (Australian dollar, Euro, Japanese yen), there are many different cryptocurrencies. In fact, there are more than 1300 with the most well-known of these is Bitcoin.

A new cryptocurrency can be created at any time. Bitcoin is the world’s largest cryptocurrency followed by Ethereum, Ripple, Bitcoin Cash, Cardano, and Litecoin.

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Source: Kids News explainer: what is cryptocurrency? | Herald Sun