What is Cryptocurrency? for beginners
This is a simple beginners guide for people new to cryptocurrency.
Basic Cryptocurrency Facts
- Cryptocurrency is a type digital currency based on cryptographic mathematics and uses a technology called "the blockchain".
- Bitcoin was the first created cryptocurrency.
- Cryptocurrencies are also called "cryptos" or "alt coins".
- They are referred to as alternative coins because many cryptocurrencies are copies of Bitcoin. People literally copied the computer program code, changed a few things and renamed it as a new coin.
- Some alternative cryptos are actually trying to improve Bitcoins code and develop new features. However, many of these new cryptos are meaningless and have no value, some are even known and proved to be scams.
- There are currently over 5,000 of these cryptos on the internet, and more being created every day.
- Popular cryptocurrencies include: Ethereum, Litecoin, Ripple, Monero and many more.
What can you do with Cryptocurrency?
- Spend them using a crypto debit card.
- Trade them on a trading site or trading app.
- Buy some crazy things with them.
Where can you buy Cryptocurrency?
- Usually you need to buy Bitcoin first, and then trade that Bitcoin for the cryptocurrencies you want. However, some crypto exchanges provide means of buying the most popular cryptocurrencies directly without buying Bitcoin first.
- For your safety, only buy cryptocurrencies on ASIC regulated and reputable Australian crypto exchanges.
Crypto vs Token vs Coin: What’s the Difference?
- The words Crypto and Coin can be interchangeable. They mean the same thing.
- Crypto Tokens however are different, they usually get issued by a crypto company. Which you can trade the tokens for goods and services.
- For example, crypto tokens could be issued in loyalty programs for discounts or offered to represent ownership, in full or partial of a digital asset.
- The most common tokens are ERC20 provided by Ethereum. These smart crypto tokens often serve as the transaction units on the blockchain and introduce the concept of smart contracts.