Cryptocurrency is a type of virtual currency that uses cryptography to secure transactions that are digitally recorded on a distributed ledger, such as a blockchain. A transaction involving cryptocurrency that is recorded on a distributed ledger is referred to as an “on-chain” transaction; a transaction that is not recorded on the distributed ledger is referred to as an “off-chain” transaction.

Every bitcoin transaction must be added to the blockchain, the official public ledger of all bitcoin transactions, in order to be considered successfully completed or valid. The work of validating transactions and adding them to the blockchain is done by miners, powerful computers that make up and connect to the network. Miners spend vast amounts of computing power and energy doing this for a financial reward: with every block (a collection of transactions not exceeding 1 MB in size) added to the blockchain comes a bounty called a block reward (currently 6.25 BTC), as well as all fees sent with the transactions that were included in the block

Blockchain technology connects millions of computers that can all store/host encrypted copies of these records. So instead of one record keeper, you have millions of record keepers called 'nodes'. One record keeper can tamper records, collude with third parties and commit fraud, but now there are a million nodes who are keeping a watch on each other. Much like the internet provides an infrastructure for communication, blockchain provides an infrastructure for record keeping.

Regulation can solve this concern. Across the world, regulators have evolved regulations to solve this issue. Licensed intermediaries (crypto-exchanges) can help the regulator maintain oversight and control over cryptocurrency transactions through mandatory requirements such as extensive know-your-customer or KYC checks on traders, taking anti-money laundering measures and maintaining transaction records. This is how existing financial institutions such as banks and stock exchanges keep track of financial transactions and verify customer identity.

Cryptocurrencies have an inherent utility as a technology. People also buy them to use them as a monetary asset, and demand and supply determine their value. Now this is similar to buying land – you can buy land to use it (build a house etc) or invest in it. Likewise, people invest in cryptocurrencies. These investments are used by cryptocurrency developers to fund further development of their projects.

Given the tremendous potential of this technology, investments here will reap high returns. Taking a note of this companies such as Tesla are investing their treasury reserves in to bitcoin.