A cryptocurrency is a type of digital currency that is based on cryptography, you know: public, private keys, signing, SSL, DES, etc. Why? Well, for the usual reasons that you choose to encrypt your own data. Confidentiality mixed with the security to making money difficult to counterfeit.Since cryptocurrencies often exhibit a distributed nature, asymmetric cryptography (i.e. public and private keys) is often preferred over single key schemes.Leaving the technical view aside cryptocurrencies also have political meaning. They are considered to be a “counter-culture” movement similar to cypherpunks (tech and cryptography enthusiasts) and the traditional hacker spirit (e.g. Richard Stallman: “free software, free society”), to change the political society. Gavin Andresen, lead developer of “The Bitcoin Project” told forbes that cryptocurrencies are an attempt to have a decentralized “currency of the people” with no interfering of a central bank.One of the perks of distributed, global cryptocurrencies are that they’re basically fiat currencies, meaning that the value is dependent on the people’s estimate of it’s worth, i.e. its value is basically determined by supply and demand. Also they are not subject to central regulation, thus a central bank such as the Fed (Federal Reserve System) cannot lower or increase their value. A side-effect of decentralization is that it is hard to impossible for law enforcement to freeze, or wipe, user transactions and accounts. Law jurisdiction also has a hard time to track payments committed by users, this makes it hard to block what would otherwise be illegal niche markets (such as illegal drug acquisitions).
