Cryptocurrency Definition, Characteristics, Types, Function & Risks

For followers of the development of technological trends, the term cryptocurrency must be familiar. In short, cryptocurrency is a digital currency that is guarded by a cryptographic security system. Crypto money can generally be used to purchase various digital goods.

Prices and characteristics of cryptocurrencies vary greatly, depending on the type you choose. Then, what is cryptocurrency in Indonesia and what are the risks of owning this type of money?

What is Cryptocurrency?

Cryptocurrency Definition, Characteristics, Types, Function & Risks

Just like dollars and rupiah, cryptocurrency is a currency that has no physical form, but is still legal to use as a digital medium of exchange. Some of the transactions that you can do using cryptocurrency are online shopping, in-game purchases, to buying other types of cryptocurrency.

This money is kept safe using cryptography. The use of this method is useful for protecting privacy at a high level, the method is to provide a multilevel security layer using a series of codes. So it will be difficult to dismantle a system that utilizes cryptography.

Cryptocurrency Characteristics

This one currency has several characteristics that you need to know. One of the characteristics of cryptocurrencies is that they are digital and intangible. Not only that, there are several characteristics of cryptocurrencies that can help answer your questions about this transaction tool.


If the rupiah is available in the form of sheets and coins, it is different from this one currency. The cryptocurrency form is digital, so there is nothing real physical to hold. This also affects the process of buying and exchanging cryptocurrencies. The whole process is done digitally.


The second characteristic of cryptocurrencies is that they are global. If you are familiar with currency rates, it will have no effect on cryptocurrencies. The value of this digital money is the same in every country. So if you make transactions using cryptocurrency between countries, the value will not change.

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Peer to peer

Third, transactions using cryptocurrency are peer-to-peer. If you translate “peer” into Indonesian, then the word will refer to the meaning of “peer”. This means that the transaction in question occurs between one person and another online.


If you go shopping to the market, surely the seller will know your face right away. Or for example when you shop online through e-commerce, at least they know your identity in the form of a profile name, email or telephone number.

Unlike the two shopping styles above, by making transactions using cryptocurrency, users will not be able to see the true identity of those who make transactions. Users have codes to make transactions, so their real names will not be exposed.


The fourth characteristic of cryptocurrencies is that they are decentralized. This digital currency has flexible access. Cryptocurrency transactions are transactions that do not involve any bank, everyone is responsible for their money.


When deciding to make transactions using cryptocurrency, you need to know in advance that this currency has a truthless character. This means that in transactions, you should not really trust anyone in the system.

Types of Cryptocurrencies

Until now, the number of types of cryptocurrencies has reached thousands. Here are five types of cryptocurrency that are commonly known to many people. Here are some lists of cryptocurrencies that you can make references to.

  1. Bitcoins (BTC)
  2. Tokenomy (TEN)
  3. 1INCH (1INCH)
  4. AAVE (AAVE)
  5. Abyss (Abyss)
  6. Achain (ACT)
  7. Cardano (ADA)
  8. Algorand (ALGO)
  9. ANKR (ANKR)
  10. Aurora (AOA)
  12. ATT (ATT)
  13. Balancer (BAL)
  14. Basic Attention Tokens (BAT)
  15. Bitcoin Diamonds (BCD)
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Cryptocurrencies in Indonesia

The development of cryptocurrency in Indonesia itself is quite rapid. Generally, people from the upper middle class already know about the term. But what about the regulatory side, is cryptocurrency legal to use in Indonesia?

Cryptocurrency is an asset that can be traded in Indonesia. This is specified in the regulation of the Commodity Futures Trading Regulatory Agency Number 7 concerning Establishment of Lists of Crypto Assets that Can be Traded on the Physical Market of Crypto Assets. This regulation officially took effect on December 17, 2020.

According to a Populix survey, 65% of people get cryptocurrency in Indonesia through trading applications. In addition, they also use the mining method. Looking at the data we collect, some of the behavior of cryptocurrency applications are as follows.

The bitcoin investment application that users are most interested in is Indodax. As many as 61% admit to using Indodax compared to other applications. Each platform has different terms and conditions. So, it can be adjusted according to your personal preferences.

Cryptocurrency Functions

After knowing the meaning and examples, maybe you are wondering why owning cryptocurrency? One answer is for investment. Most of them buy cryptocurrencies for future investment purposes. In addition, there are several functions that can be obtained. Check out the full explanation below.

Investment assets

Cryptocurrency is a currency whose value is very easy to change. Even so, some of them tend to have a high value. So that some people and even companies use it as an investment asset.

Bitcoin investment is one of the choices of several large companies, one of which is Tesla. In 2021, the electric vehicle company managed to make a profit of around 200 million dollars from the bitcoin investment it made.

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The factor that can underlie bitcoin investment is its much higher value than other cryptocurrencies. The latest update for 1 BTC is equivalent to around 530 million rupiah.

Means of exchange for goods or services

Currently, many companies are starting to look at various types of crypto money such as Bitcoin and others. Therefore, cryptocurrency is a medium of exchange that you can use to buy certain goods or services.

Cryptocurrency mining

Cryptocurrency mining or cryptocurrency mining is the process of solving cryptographic puzzles to confirm transactions made. This process is important for you if you want to earn large amounts of profit.

This process often appears in Bitcoin transactions. This aims to avoid multiple transactions of one type of BTC. Because the value is very high, if this process is successful, the miner will get a reward.

Cryptocurrency risks

  • Investing in cryptocurrencies is interesting to try. Even though the value changes frequently and quickly, there is still a possibility that the price of your cryptocurrency will increase in the future. The amount is not small, it could even reach half a billion.
  • Cryptocurrency is a digital currency that is protected by a cryptographic system. Any form of transaction involving cryptocurrencies is practically invisible. This is one of the factors that can lead to illegal activities.
  • The cryptocurrency container is a system. Where you definitely have to have a password to save this type of money. Carelessness such as forgetting passwords can also be one of the risks of owning cryptocurrency.
  • Not all countries consider cryptocurrency a legal currency. So you may not necessarily be able to make transactions between countries that you want.

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