What Is a Cryptocurrency?

A cryptocurrency is a new form of money invented by Satoshi Nakamoto when he published his Bitcoin white paper in October of 2008, and launched the Bitcoin blockchain network by releasing and running the first node software in January of 2009 with Hal Finney as the first other user.

Up until then, money was usually either a commodity product; such as gold; or a national currency; such as the dollar, euro, ruble, yen, yuan, or peso, also known as fiat currencies, which are issued by national governments.

The term "crypto" in "cryptocurrency" is used because blockchain networks are built with cryptographic components created by cryptologists. Some of these components are hashcash, the proof of work component of blockchains; public key cryptography, the private key and addresses component; Merkle trees, the way in which transactions are transformed into smaller, concise snippets of information and stored in the data base; and hash functions, which are cryptographic functions that transform any amounts of transaction and block data into fixed size values.

The term "currency" in "cryptocurrency" is used because the units that are issued as money inside blockchains are scarce, durable, costly to create, portable, divisible, fungible, and transferable.

The term "blockchain" is a neologism that has been adopted to name these networks as they are effectively chains of blocks of data, as new transactions are grouped in blocks and added to the network every 15 seconds to 10 minutes by miners or stakers, depending on the network.

Examples of cryptocurrencies are Bitcoin (BTC), Ethereum (ETH), Ethereum Classic (ETC), DAI, USDT, USDC, and WETH, which Emerald supports. Other non-supported cryptocurrencies yet may be Litecoin (LTC), Dogecoin (DOGE), Polkadot (DOT), BNB, Solana (SOL), Cardano (ADA), and Shiba Inu (SHIB).

What is a native cryptocurrency?

A native cryptocurrency is the one that is created by the blockchain network itself to pay for miner or staker rewards and to pay for transaction fees. These cryptocurrencies have a real economic use since inception as they are issued only in exchange for the work or staking by miners or stakers.

Aside, from being issued and used for the internal economics of the blockchains where they exist, these cryptocurrencies can be bought, sold, transferred, and used for payments freely in the broader economy.

Examples of native cryptocurrencies are Bitcoin (BTC), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC) and Dogecoin (DOGE).

What is a programmable native cryptocurrency?

A programmable native cryptocurrency is a native cryptocurrency that exists inside a blockchain that supports smart contracts, which are decentralized software programs. The programs allow the accounts and balances inside these networks to be programmable as they may respond to instructions from these smart contracts.

Examples of programmable native cryptocurrencies are Ethereum (ETH), Ethereum Classic (ETC), Polkadot (DOT), Binance Smartchain (BNB), Solana (SOL), and Cardano (ADA).

What is a non-native cryptocurrency or ERC-20 token?

Because in smart contracts or programmable blockchains people can create any types of software programs and dapps (decentralized applications), one type of software program may be to create a new cryptocurrency, but that is not native to the network. These cryptocurrencies or tokens exist inside the blockchain as well, but they are not issued by the blockchain network. They are just created by developers to issue new cryptocurrencies for different purposes.

The term "ERC-20 token", which is used to create these non-native cryptocurrencies, stands for "Ethereum Request for Comment" or "ERC" and the number "20" is the number of that particular ERC. The ERC-20 definition of rules and ways to create non-native cryptocurrencies is now an industry standard.

Examples of these non-native cryptocurrencies or ERC-20 tokens may be Shiba Inu (SHIB), DAI, USDT, USDC, and HEX.

What is a stablecoin cryptocurrency?

A stablecoin cryptocurrency, or just stablecoin, is a non-native cryptocurrency or ERC-20 token that is pegged or associated to a national currency such that 1 token equals 1 unit of the national currency.

These tokens or cryptocurrencies are called "stablecoins" because they are always worth 1 unit of the underlying national currency despite market conditions.

Examples of these stablecoins may be DAI, USDT, and USDC which are all worth $1 because they are pegged to real US dollars deposited in a bank account or are guaranteed by other crypto assets to be worth $1 all the time.