If you’re new to the cryptocurrency world, welcome! This article is for you if you have no idea what cryptocurrency is, and also if you wish to know more about cryptocurrency.
With the world going digital and whatnot, cryptocurrency is a digital currency that can be used to buy and pay for goods and services. It’s just like money! You know how you send money to your mum, dad, or pay for your DSTV subscription, yeah? Cryptocurrency allows you to do all of that as well as a couple of other things.
Types Of Cryptocurrency
There are 3 main types of cryptocurrency i.e Bitcoin, Altcoin and Tokens.
Bitcoin was the beginning of cryptocurrencies. At the time the idea was revealed, no one knew that Bitcoin would become what it is today. Bitcoin is a type of digital currency that you can send to people. Bitcoin is just like the money we use in our bank accounts except for the fact that it is not physical. How cool! No one really knows the name of the creator of Bitcoin till date!
One amazing thing about this crypto is that it doesn’t need a bank or any third party to access it. Each transaction happens directly between users and that is what makes it different from real money. Note that transactions here are processed on the blockchain. Now you might be wondering, what does that even mean? Blockchain is the technology that is used by Bitcoin to allow secure and anonymous transactions. Anonymous as in, you don’t need to reveal yourself. Bitcoin is the most common type of cryptocurrency and we need to know how it works.
How does Bitcoin work?
When you send someone Bitcoin or when someone sends you Bitcoin, the transaction is verified and then stored on the blockchain. The information that is stored on the blockchain is encrypted and can only be decrypted by the owner of the Bitcoin. How? Each owner of Bitcoin is given a private key and that is how they decrypt and access their Bitcoin.
The majority of altcoin in existence are just alternate versions of Bitcoin but with minor changes. There are some altcoins that are very different from Bitcoin and thereby have very different purposes. Ethereum and NEO are examples of altcoins that are very different from Bitcoin. How? Ethereum and NEO were designed as huge platforms for building apps on blockchain, not to be used as a digital currency.
Tokens are used on decentralized applications. These are apps that can be built on blockchain (like Etherum and NEO). The decentralized apps are used to build smart contracts. Smart contract is a technology that Ethereum introduced that can automatically execute transactions when certain conditions that are written into the smart contract, happen.
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