Basics of Cryptocurrency
Basics of Cryptocurrency
Basics of Cryptocurrency
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Chibuzor Emmanuel
Michael Okpara University of Agriculture, Umudike
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CRYPTOCURRENCY BASICS
Cryptocurrency is a currency in digital form in which every transaction is carried out
online without any physical exchange. It is a medium of exchange like any other fiat
such as Nigerian Naira (NGN), USD, EUR, etc. but differs from fiat in the sense that
it was designed to exchange digital information through a process known as
cryptography. Cryptocurrencies leverage blockchain technology to gain
decentralization, transparency, and immutability.
Cryptocurrency empowers ordinary people because no centralized power is required
to transact with cryptocurrencies.
Bitcoin is the first and most popular Cryptocurrency which was invented by Satoshi
Nakamoto in 2009. Currently there over three thousand cryptocurrencies which are
classified as tokens or coins. Every other cryptocurrency but Bitcoin is called an
Altcoin.
A token is a cryptocurrency that is built on existing blockchain. Tokens do not have
their own blockchain but depend or exist on an existing blockchain of a
cryptocurrency. Examples of tokens include Basic Attention Token (BAT), Bancor
(BNT), Status (SNT), etc.
A coin is a cryptocurrency that is independent of any other blockchain. A coin
operates on its own independent blockchain and acts like a native currency within a
specific financial system. Examples of coins include Bitcoin (BTC), Ethereum
(ETH), Ripple (XRP), Tron (TRX), etc.
BLOCKCHAIN TECCHNOLOGY
Blockchain is a distributed, decentralized public ledger. We can say, blockchain
simply means chain of blocks. This simply means digital information (“the block”)
stored in a public database (“the chain”). Blocks on a blockchain has three parts:
a. Blocks show information like date, time and amount.
b. Blocks store information about who carried out the transaction by using digital
signature instead of identifiable names.
c. Blocks store information that makes them different from other blocks by the
use of a unique code called HASH.
3. Step 4: Buy some Bitcoin and store them in your wallet: like I said above,
one can purchase a cryptocurrency using fiat from some centralized exchanges.
You can make payment to such exchanges with your credit card or debit card.
Many people often buy Bitcoin or Ethereum and use any of them to exchange
for other cryptocurrencies. One can buy Cryptocurrencies using fiat from
exchanges like http://binance.com, http://pro.coinbase.com etc.
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