Cryptocurrency
What is cryptocurrency?
Cryptocurrency is a digital or virtual currency that uses cryptographic protocols to secure transactions, control the creation of new units, and verify transfers without a central financial institution. Value moves peer to peer across a distributed , most commonly a blockchain that keeps transaction records on many independent nodes.
Cryptographic hashing and digital signatures keep those records tamper-evident, and a consensus mechanism such as proof-of-work or proof-of-stake decides which transactions the ledger accepts. Participants transact through pseudonymous addresses rather than named accounts, so the ledger itself is public while the identity behind an address isn't. In commerce, crypto sits alongside cards and wallets as a payment rail with its own custody, pricing, and compliance model.
Key facts
- Also known as: crypto, digital currency, virtual currency
- Core technology: a distributed ledger secured by , with a consensus mechanism that determines which transfers are confirmed
- Unit issuance: governed by protocol rules rather than a central bank, either as a capped supply or an algorithmic schedule
- Reversibility: a confirmed on-chain transfer is final, and there is no right against the sender's bank
- Merchant acceptance: through a crypto payment provider that converts to fiat at checkout, or through a self-custodied wallet address
- Common use cases: checkout, cross-border , remittance, and settlement between businesses in different banking systems
Types of cryptocurrency
The categories below describe economic design rather than technology, and a single asset can serve more than one role.
- Payment coins – Bitcoin and Litecoin are the best-known examples, designed as a medium of exchange with issuance fixed by the protocol.
- Stablecoins – USDT and USDC track the value of a reserve asset such as the US dollar, which is why they carry most of the volume in crypto checkout and payout flows.
- Platform tokens – Ether and SOL pay for computation and storage on programmable networks, where smart contracts execute transfer logic without an intermediary.
- Privacy coins – Monero and Zcash obscure the transaction graph. Exchanges and payment providers frequently restrict them, because screening depends on being able to trace an address history.
Why it matters
- Reach where card acquiring is unavailable. A crypto transfer doesn't route through correspondent banking, so a payout can reach a recipient in a market with no local acquiring relationship and no usable bank transfer route.
- No payer-initiated reversal. A confirmed on-chain payment cannot be pulled back by the payer's bank, so the merchant carries no dispute exposure on that transaction. A refund is a new outbound transfer that the merchant initiates and pays network fees on.
- Price exposure on unconverted balances. Crypto held in the original asset changes value against the merchant's reporting currency between checkout and accounting close, which is why most merchants convert at the point of sale and treat the result as a line.
- Compliance obligations transfer to the merchant's provider. Accepting crypto brings and anti-money laundering duties, including screening receiving and sending addresses against sanctions lists and known illicit-activity clusters.
How it compares
Crypto, cards, and wallets differ most in who can reverse a payment and what the merchant actually receives.
| Rail | Reversal by the payer | What the merchant receives |
| Crypto transfer | Not possible once confirmed on-chain | The crypto asset, or fiat if the provider converts at checkout |
| Chargeback right within scheme dispute windows | Fiat, after acquirer | |
| Follows the rules of the funding card or bank account | Fiat, through the wallet's underlying rail |
