There is still a lot of confusion around terms like cryptocurrency and blockchain. Can you provide a quick primer?
A cryptocurrency is a digital or virtual currency that is secured by cryptography — which makes it nearly impossible to counterfeit. ‘Cryptos’ allow for secure online payments that are denominated in terms of virtual ‘tokens’, holding the promise of making it easy to transfer funds directly between two parties without the need for a trusted third party like a bank or credit card company. Unlike traditional currency, cryptos are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.
Blockchains are an essential component of many cryptocurrencies. These are cryptographically protected distributed ledgers made up of ‘blocks’ that contain transaction history. As the blockchain grows longer and longer, it becomes increasingly difficult to alter older transactions, ensuring the integrity of transactional data.
There are two main types of cryptocurrencies. The first are essentially tokens or ‘digital stickers’ that run on a platform. The only thing that can be done with them is to shift them around. Examples include , and . The second type of cryptocurrency is used as a built-in payment and rewards system for blockchain networks. In return for using these tokens, you receive a computational service., which is a decentralized, open-source blockchain. is the native cryptocurrency of this platform, and after Bitcoin, it is the second-largest cryptocurrency by market capitalization.
