Cryptocurrency is a form of digital or virtual currency that uses cryptography to secure its transactions and to control the creation of new units. Cryptocurrencies are decentralized, meaning they are not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009.
Cryptocurrencies are often traded on decentralized exchanges and can also be used to purchase goods and services. Bitcoin, for example, can be used to purchase items on Overstock.com and Expedia.
What is Bitcoin?
Bitcoin is a cryptocurrency and a payment system, first proposed by an anonymous person or group of people under the name Satoshi Nakamoto in 2008. Bitcoin is unique in that there are a finite number of them: 21 million.
Bitcoins are created by a process called "mining." Miners are rewarded with bitcoins for verifying and committing transactions to the blockchain. Bitcoin can also be purchased on decentralized exchanges.
What is Ethereum?
Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of fraud or third party interference. Ethereum is unique in that its cryptocurrency, Ether, can also be used to pay for services on the Ethereum network.
What is a Cryptocurrency Exchange?
A cryptocurrency exchange is a platform where cryptocurrencies can be bought and sold. Cryptocurrency exchanges often charge fees for their services. Some exchanges, like Coinbase, also offer a wallet service.
What is Blockchain?
The blockchain is a digital ledger of all cryptocurrency transactions. It is constantly growing as "completed" blocks are added to it with a new set of recordings. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Bitcoin nodes use the block chain to differentiate legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.
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