OKX Blockchain 60 Lectures | Extra Episode 2: What is cryptocurrency?
Hello everyone, I'm Xiao K. Today we're going to talk about: "What is cryptocurrency"?
Currently, cryptocurrency on the market can be divided into two categories. The first category is represented by the digital legal tender that central banks of various countries are preparing to issue — for example, China's central bank cryptocurrency (DC/EP). This type of cryptocurrency is legal tender and can truly function as money. The second category is represented by early cryptocurrencies like "Bitcoin, Ethereum" and similar projects.
Let's start with the first category of cryptocurrency. Some of you might be wondering: what's the difference between this type of cryptocurrency and the electronic cash we use daily, such as Alipay or online banking? From a practical usage perspective, there is actually no difference between this type of cryptocurrency and electronic payment methods like Alipay or WeChat Pay — it is essentially legal tender. However, when looking at the underlying operational logic, the two are fundamentally different. Cryptocurrency adopts new technologies such as blockchain, which significantly redesign the underlying payment processes and settlement logic.
When we use electronic payment methods like Alipay or WeChat Pay, the settlement is still conducted through traditional commercial banks using fund transfer methods, which can cause inconveniences in the event of network or other issues. In contrast, central bank cryptocurrency settlement operates through a unified central bank system, enabling value transfer even without relying on traditional bank accounts. It can be said to combine the easy circulation of physical cash with the convenience of electronic payments.
Additionally, because central bank cryptocurrency leverages blockchain technology, it carries characteristics such as immutability and traceability. This gives central bank cryptocurrency unique advantages in tracking and anti-money laundering efforts — advantages that traditional electronic cash does not possess.
Now let's discuss the other category of traditional cryptocurrencies represented by "Bitcoin, Ethereum" and similar projects. This category represents the earliest batch of cryptocurrencies. Although their names contain the word "currency," they are not真正意义上的法币, because their issuers are not nations and therefore they lack public credibility.
Nations classify this category of cryptocurrency as commercial circle tokens. Commercial circle tokens refer to tokens that have their own unique use cases and serve a partial payment function within those scenarios. For example, Bitcoin can be used as a payment tool on some platforms for cross-border payments and purchasing network services on foreign websites. Similarly, Ether serves as a payment channel on the Ethereum smart contract platform, used to purchase the gas fuel that powers smart contract execution.
Of course, some countries, such as the United States, Japan, and South Korea, define this category of cryptocurrency as an investment asset — similar to gold or stocks — possessing investment value.
Furthermore, due to the characteristics of blockchain technology, this type of cryptocurrency has no真正意义上的发行主体, and some have even脱离了创始团队的掌控, becoming more decentralized. They all rely on cryptography, smart contracts, and other blockchain technologies to solve the trust problem. Therefore, anyone can participate, reach consensus together, and circulate within a community.
In summary, cryptocurrency can solve many real-world problems, such as cross-border payments and customized decentralized financial services, and possesses genuine practical value. Currently, nations are also accelerating the pace of developing legal cryptocurrency. We believe that legal cryptocurrency will soon be launched, at which point it will begin integrating into our lives and become one of the essential financial tools. Let's look forward to it together!
Special thanks to Instructor Cao Yin for his assistance and guidance on this episode.
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Disclaimer
This article may contain product-related content that does not apply to your region. This article is committed to providing general information only and does not accept responsibility for any factual errors or omissions. The views expressed in this article are solely those of the author and do not represent the views of OKX. This article is not intended to provide any advice, including but not limited to: (i) investment advice or investment recommendations; (ii) offers or solicitations to buy, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. Holdings in digital assets (including stablecoins) involve a high degree of risk and may fluctuate significantly, or even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. For questions specific to your circumstances, please consult your legal/tax/investment professional. The information contained in this article (including market data and statistical information, if any) is for general reference purposes only. Although all reasonable precautions have been taken in preparing such data and charts, we accept no responsibility for any factual errors or omissions expressed herein. © 2025 OKX. This article may be reproduced or distributed in its entirety or in excerpts of 100 words or less, provided that such use is non-commercial in nature. Any reproduction or distribution of the entire article must prominently state: "This article is copyrighted © 2025 OKX, used with permission." Permitted excerpts must cite the article title and include attribution, e.g., "Article Title, [Author Name (if applicable)], © 2025 OKX." Some content may have been generated or assisted by artificial intelligence (AI) tools. Derivative works and other uses of this article are not permitted.
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