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Defining cryptocurrency

It is easy to be misled by words, especially in the conversation around cryptocurrency. Here, Matthew Leitch explains what certain terms mean, helping you avoid expensive consequences.

When it comes to cryptocurrency, misleading words are often the source of fundamental misunderstandings that can have expensive consequences.

In this article, we will take a look at some words that create the false impression that cryptocurrencies are technically efficient and that buying yet-to-be-created crypto-coins is similar to buying shares on the stock exchange. The first four misleading words relate to how cryptocurrencies work.

Transaction terminology

Transactions made using cryptocurrency such as bitcoin are recorded on a system called 'blockchain', which is said to be 'distributed' over a network of computers.

In the technical terminology of computing this is true, but ordinary interpretation of those words creates a false impression. Those words suggest that there is one data pot that somehow records all the transactions and that it is distributed across many computers.

This is an extract from the Business & Management Magazine, Issue 272, March 2019.

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