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Cryptocurrencies, stablecoins, digital currencies: how do they work?

The digital tokens have grown into a popular and often highly volatile asset class

Cryptocurrencies, which first emerged in the wake of the global financial crisis, offered a vision of money free from central bank control. Since their creation, they have boomed into a highly volatile and divisive asset class.

Bitcoin, the most traded cryptocurrency by volume, has a market value of around $700bn alone, according to CoinMarketCap, but can suffer huge losses from a single tweet.

Policymakers have grown increasingly concerned about potential fallout from cryptocurrency markets, launching crackdowns and regulatory consultations. Proponents argue cryptocurrencies offer an alternative to centralised financial systems, a way to wrest control from central banks and stimulate innovation; but the market has also been exploited by fraudsters, while their creation has raised environmental concerns and the spectre of wider financial implications.

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