# 3.2 What is Cryptocurrency?

Cryptocurrency, a new form of currency born in the digital age, is gradually changing our economic life and transaction methods. It originated with Bitcoin but has now developed into a vast and diverse system. Cryptocurrency is not just a means of payment but also represents digital assets, ensuring transaction security and reliability through advanced encryption technology.

**Innovations in Digital Age Payments:** The initial design concept of cryptocurrency was to meet the needs of internet payments. In traditional financial systems, cross-border payments or large transactions are often subject to many restrictions, whereas cryptocurrencies break these constraints, providing users with a more convenient and efficient payment method. Through decentralized networks, cryptocurrencies enable instant transactions on a global scale, significantly reducing transaction costs and time.

**Representation of Digital Assets:** Cryptocurrency not only serves as a payment tool but also as a digital asset representation. Each cryptocurrency represents a specific right or value, such as monetary value, asset value, or even specific services or rights. For example, some cryptocurrencies may represent voting rights or dividend rights in a particular project, allowing holders to participate in decision-making and profit distribution.

**Robust Security Provided by Encryption Technology:** Cryptocurrency security benefits from advanced cryptographic techniques. These technologies ensure transaction authenticity and tamper resistance, allowing each transaction to be effectively verified and recorded. In addition, encryption technology protects user privacy, maintaining transaction anonymity and security. This protection mechanism provided by cryptography forms an impregnable security barrier for cryptocurrency transactions.

**Diversified Cryptographic Assets:** With technological development and innovation, cryptocurrencies have evolved into various forms, such as NFTs (Non-Fungible Tokens), inscriptions, etc. These cryptographic assets broadly fall under the category of cryptocurrencies and can represent various unique rights and values. For example, NFTs can represent ownership of digital artworks, game items, and other unique assets, while inscriptions may represent specific skills or attribute bonuses. These diversified cryptographic assets bring more possibilities and innovation space to the digital economy.

**Driving Digitization of Social Rights:** The widespread application of cryptocurrency is driving the digitization of social rights. From identity authentication to diploma certification, from currency to notes, from tickets to point coupons, and even stocks and bonds and other financial assets, all can be reflected and traded in the form of cryptocurrencies or NFTs. This not only improves transaction efficiency and security but also provides individuals and businesses with more economic freedom and choices.
