Digital Currency (CIE IGCSE Computer Science)

A digital currency is a type of currency that exists only in electronic form and is not backed by any physical commodity or government. 

• Only Exists Electronically
• Digital currencies are purely electronic, meaning they do not exist in physical form like traditional currencies such as cash or coins. They are stored in digital wallets or accounts and can be transferred electronically between individuals or businesses

• Decentralised
• Many digital currencies operate on a decentralised network; meaning that they are not controlled by any central authority like a government or financial institution
• Instead, transactions are verified and recorded on a public ledger known as a blockchain
• Used for Transactions
• Digital currencies can be used for various transactions, including purchasing goods and services online or transferring money internationally
• They can also be used for investments or as a store of value
• Volatile
• Digital currencies can be highly volatile; meaning their value can fluctuate rapidly over short periods of time
• This can make them risky investments and can also make it difficult to use them as a stable store of value
• Examples include Bitcoin, Ethereum, Litecoin, and Ripple

• Blockchain is a digital ledger that records every transaction made with a particular digital currency
• Each transaction is time-stamped and added to the blockchain in a permanent and unalterable way
• Blockchain is a decentralised technology, meaning that it is not controlled by a single entity or authority
• Instead, every participant in the network has a copy of the ledger and can verify the transactions independently
• The blockchain is made up of "blocks" of transactions that are linked together in a "chain" using  cryptographic algorithms
• This creates a secure and tamper-proof record of every transaction made with the digital currency
• Each transaction in the blockchain must be verified by multiple participants in the network 
• This verification process ensures that the transaction is legitimate and prevents any fraudulent activity