Where Does Cryptocurrency Come From? Answered

Cryptocurrency is known to be a digital exchange medium that is decentralized. Neither the bank nor the government has issued it. A lot of people are now aware of Bitcoin, Ethereum, and how Bitcoin is changing the financial world. But other than these there are over 5,000 such cryptocurrencies that will become most-talked-about next.

With so many cryptocurrencies out there, we all are wondering from where they come? As a bank or government is not involved, it means there is no need for printing or minting. However, anyone can spend cryptocurrency like traditional money. This digital currency originated from a completely different procedure.

Define cryptocurrency

  • A digital currency that is decentralized is known as cryptocurrency.
  • You can buy or sell things using it.
  • Many investors are attracted to crypto because of its possibility for storing and growing value.
  • Many cryptos are available these days. The first popular one is Bitcoin.
  • Bitcoin Cash and Ethereum are the other popular cryptos.
  • Each crypto serves a different purpose.
  • Some are optimized for usage in the case of cash while others are designed for direct and private transactions.
  • Owners hold their crypto in their digital wallets.
  • They buy and sell them via an online exchange.

Are all crypto software?

  • Various cryptos such as Ethereum or Bitcoin are mined, except others. 
  • Regardless of the origin process, every crypto is software. 
  • Codes are used to create them. These codes determine each function that is associated with the crypto. 
  • Be it about the storage of data or record of transactions and distribution or supply of coins everything is determined by the code. 
  • Mostly these codes are public. But the software used for generating a provided crypto is decentralized similar to that of the crypto.
  • This software that is decentralized gets hosted on individual computers worldwide rather than on any central server. 

Cryptography, Blockchain, and Algorithms are of great importance

  • Cryptos are designed in such a way that they are used in the form of money.
  • Hence transactions get stored on a secured database known as the blockchain.
  • This blockchain acts as the ledger of every coded transaction.
  • Once it enters a blockchain, no entry can be changed in the database without fulfilling certain conditions.
  • Anyone involved will be able to view every transaction’s public record.
  • With the help of blockchain technology, cryptocurrency will be achieving its three vital defining features such as decentralization, transparency, and immutability.
  • End-users are familiar with a part of this code popular as coins or tokens.
  • It is simply a string of numbers that get stored on the blockchain.
  • Algorithms generate cryptos. These algorithms depend on cryptography. So it is named cryptocurrency.

Mining of most cryptos

  • Usually, the algorithms that power up the industry of cryptocurrency are mainly written for awarding tokens or coins to computers adding transactions to the blockchains.
  • Such a procedure is called mining.
  • Special hardware is used by miners.
  • They also use the public and decentralized software of the crypto for adding transactions to the blockchain.
  • Miners receive payment in new crypto tokens when they offer important blockchain maintenance.
  • Many crypto tokens or coins get created in this way.
  • Anyone can become a miner, technically. However, it is costly, complicated, and competitive if you do not succeed and it demolishes a huge power.

Some cryptos are not mined

  • Few cryptos were not designed for replacing fiat currency such as the dollar.
  • It was not meant to be used similarly to traditional money.
  • Such non-mineable crypto is mostly generated for rewarding early investors in the new crypto launch named an ICO or initial coin offering.
  • New cryptos can also be created via some deviation in the blockchain known as a hard fork.
  • They occur when there is a significant change in blockchain protocols.
  • Thus a new and unique branch is created on the blockchain. It is not compatible with the old blockchain.
  • For example, Bitcoin Cash was created via hard fork on the main Bitcoin chain.


Using crypto to purchase things does make sense in a few cases. Among cryptocurrency payments these days, only Bitcoin is accepted by most platforms even after its high price fluctuations. In the future, we may see that payments using digital assets are becoming very common. Cryptocurrencies such as stablecoins that are identified as less volatile may become highly popular and undertake possible government regulation.