You may know all about cryptocurrency, you may have heard of it or you may know absolutely nothing.
- Bitcoin was the first cryptocurrency; it went public in 2009. There are now over 1,000 different cryptocurrencies.
- ‘Cryptocurrency’ is an umbrella term that is used to refer to tokens and coins. Not all ‘cryptocurrencies’ are used for trading or payment. Tokens such as Ethereum are designed almost like the App Store so that other users can build upon them for business contracts, for example.
- Cryptocurrencies are digital currencies that uses encryption (cryptography) to produce money and to verify transactions.
- These transactions are added to a public ledger, also known as a Transaction Block Chain. See below for more information on Block Chain.
- New coins are created through a process known as ‘mining’.
- Unlike traditional fiat currencies (which are usually backed by some central government) such as Pound Sterling, the value is entirely based on the utility the coin will create hence the massive increase we have seen in the value of cryptocurrencies since their introduction as their use becomes more widespread.