A cryptocurrency is a medium of exchange and speculation that, unlike paper money, does not exist in any physical form and is not issued or controlled by a central authority such as a national government or bank. Rather, it is typically developed by private individuals, and records of the creation, ownership, and transactions for each unit of the currency are stored in a highly decentralized computer database using strong cryptography.
Advantages of cryptocurrencies claimed by their advocates include possible protection from inflation, easy transfer of funds, privacy, and freedom from government control. A major disadvantage of investing in cryptocurrencies is the wide fluctuations in value, which are often compared to gambling. There is also considerable risk from online theft. Some detractors argue that cryptocurrencies offer no major net benefit to the economy or society and instead create a huge environmental cost.
The production of cryptocurrencies, such as Bitcoin, is extremely energy intensive because its "mining" requires massive computational power to solve difficult mathematical problems. Some estimates claim that Bitcoin mining alone accounts for more than a half of one percent of the world's total electricity consumption, which greatly exceeds that of many small countries, and the total electricity consumption by all cryptocurrencies is much larger.