Which statement best describes cryptocurrency?

• A. A digital currency or asset not issued by a central bank and tradable electronically
• B. A central bank issued digital currency
• C. A physical asset stored in a wallet
• D. A traditional fiat currency in digital form

Answer: (A)

The idea being tested is what defines cryptocurrency. Cryptocurrency is a digital asset that exists electronically and isn’t issued by a central bank or government. It typically runs on a distributed ledger, like a blockchain, and enables secure, peer-to-peer transactions without a central intermediary. It’s held in digital wallets and traded across electronic networks.

This description fits best because it captures both the digital, non-government-backed nature and the electronic tradability that characterize cryptocurrency. The other statements describe things that aren’t cryptocurrencies: a central bank issued digital currency is government-backed, not decentralized; a physical asset stored in a wallet refers to physical coins, which cryptocurrencies are not; and a traditional fiat currency in digital form remains government-issued fiat, not a crypto asset.