Cryptocurrencies are digital payment systems not backed or guaranteed by a government or central bank. The lack of a middle-man allows for lower transaction fees and faster transaction rates, which are core to a digital currency's appeal.
Because of their decentralised nature, cryptocurrency users can transfer and exchange money and pay for goods and services without going through formal banks. Some enjoy the fast, cost-effective nature of the arrangement; some value the at least partial anonymity; and some have taken advantage of the obvious black market benefits of operating outside the confines of state regulations.
Bitcoin, Ethereum, and other cryptocurrencies run on blockchain technology, a distributed ledger that relies on encryption algorithms to verify, record, and save data. Blockchain is widely considered to be more secure than traditional data security systems, increasing the benefits of cryptocurrencies.