Skip to main content
Part of complete coverage on

Explainer: How do cryptocurrencies work?

updated 7:28 AM EDT, Wed July 9, 2014
STORY HIGHLIGHTS
  • Over $1 million dollars are being traded in Bitcoin every day
  • Transaction history is encrypted into a chain of letters and numbers for each coin's identity
  • Fans of cryptocurrencies like the fact that no single person or institution has control

Editor's note: Future Finance is a new series showcasing future trends related to the global financial system. The show complements CNN's business coverage by examining everything from a cashless society to high-speed trading that employs the power of laser beams.

(CNN) -- Not so long ago the thought of reaching into your pocket for a digital currency might have seemed too far-fetched.

But cryptocurrencies are digital money -- and they're on the rise.

This method of payment, which cuts out the banks, is peer to peer and it's all done digitally.

While the most well-known is Bitcoin -- being the first of its kind in 2009 -- there are many others now, such as Litecoin and Feathercoin.

There's no denying that digital money is part of the future of finance. Most recent figures show there is more than $1.5 billion worth of Bitcoin in circulation.

Watch the explainer video to learn a few more facts about the world of cryptocurrencies.

ADVERTISEMENT
Part of complete coverage on
Future Finance
updated 5:53 AM EDT, Fri August 1, 2014
People across the world are using homegrown currencies to boost local economies -- and you can too.
updated 1:24 PM EDT, Fri September 19, 2014
Experts are tipping some unlikely places to become tomorrow's finance capitals.
updated 7:43 AM EDT, Mon August 11, 2014
Four experts give their advice for running a smash hit crowdfunding campaign.
updated 6:09 AM EDT, Wed September 10, 2014
Digital wallets and vein scanners: How we'll be paying for things in the future.
updated 6:57 AM EDT, Tue August 5, 2014
In the near future, big brands could be running alternative forms of currency -- shadow economies endorsed by the consumer.
updated 12:47 PM EDT, Wed July 9, 2014
Find out why Hong Kong residents don't waste time foraging for change -- for transport, shopping, groceries and coffee.
ADVERTISEMENT