It is an ordinary electronic currency. You can buy and spend it. You can store it in some electronic wallet. You can accumulate, invest and convert it into other forms of values.
Yes, it differs from classical electronic payment systems. Its main difference is that it has many service centers, which are managed by different companies. Even you can create such a company that will maintain the cryptocurrency service (become “miner”). A usual classical electronic currency has only one center. That is, there are many data centers, but only one vertical power structure.
Namely, this technical feature makes cryptocurrency different from classical electronic currencies. However, we will not focus on describing the technical aspect of the cryptocurrency. A huge number of good articles have already been written about this:
Forbes: How bitcoin works?
Coindesk: How do Bitcoin Transactions Work?
Lifewire: What Are Bitcoins?
99bitcoins: Know how bitcoin works.
Let’s see cryptocurrency with the eyes of an ordinary, i.e. mass user. Say, with the eyes of a housewife with two children.
It is unlikely that she will delve into the technical nuances. She is only interested in practical use in everyday life.
At present, there are more than 700 different cryptocurrencies, but all of them are principal copies of Bitcoin cryptocurrency (i.e. they basically operate in the same way, but differ in some particulars). Bitcoin is the first and the most widespread cryptocurrency, its share of capitalization in the total amount of cryptocurrencies as of April 2017 makes 70%. Therefore, we choose it for comparison with classical electronic currencies.
Let’s compare Bitcoin with PayPal and Perfect Money. We chose these two currencies, because, as we learn later, Bitcoin combines the best sides of these two quite different classical systems.
PayPal is the most popular classical electronic currency. It is completely legal, reliable, but at the same time significantly limits the user’s freedom.
Perfect Money is also a classical, but little-known, electronic currency. It gives users the freedom to perform various financial transactions, but at the same time, the level of its legality leaves much to be desired. You can read our review of Perfect Money.
In the table, we highlighted in green those qualities, which we consider positive. Negative qualities are highlighted in pink.